What new debt ratio

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Question - Junjun Co. has debt ratio of .50, total assets turnover of 0.25, and a profit margin of 10%. The president is unhappy with the current return on equity, and he thinks it could be doubled. This could be accomplished (1) by increasing the profit margin to 14% and (2) by increasing debt utilization. Total assets turnover will not change. What new debt ratio along with the 14% profit margin is required to double the return on equity?

a. 0.75

b. 0.65

c. 0.70

d. 0.55

Reference no: EM132754037

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