I'm having a few problems with some questions. If anyone can help that would be great.
1) A planner's % of sales model forcasts that sales will grow by 20% next year. If cost of goods sold are proportionate at 70% of sales, then costs of good sold will
a. grow to 90% of sales
b. grow in dollars by 70%
c. not change in dollar terms
d. increase by 20% in dollar terms
I chose A.
2) Which of the followng will not permit a higher internal growth rate, other things equal
a. higher plowback ratio
b. higher debt-to-asset ratio
c. higher return on equity
d. higher return on assets
I chose B
3) Which of the following will allow your firm to achieve its targets 16% ROA with an asset turnover of 2.5%
a. a leverage ratio of .0667
b. a P/E ratio of 14
c. a profit margin of 15%
d. a profit margin of 6.4%
I have no clue on this one.
Any help would be fantastic. Thank you.