Last year Rennie Industries had sales of $305,000,assets of $175,000 (which equals total invested capital),a profit margin of 5.3%,and an equity multiplier of 1.2.The CFO believes that the company could reduce its assets by $51,000 without affecting either sales or costs.The firm finances using only debt and common equity.Had it reduced its assets by this amount,and had the debt/total invested capital ratio,sales,and costs remained constant,how much would the ROE have changed?

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The Answer of Last year Rennie Industries had sales of $305,000,assets of $175,000 (which equals total invested capital),a profit margin of 5.3%,and an equity multiplier of 1.2.The CFO believes that the company could reduce its assets by $51,000 without affecting either sales or costs.The firm finances using only debt and common equity.Had it reduced its assets by this amount,and had the debt/total invested capital ratio,sales,and costs remained constant,how much would the ROE have changed?

Last Year Rennie Industries Had Sales of $305,000,assets of $175,000