Question

Burger Corp has $500,000 of assets and it uses only common equity capital (zero debt). Its sales for the last year were $600,000 and its net income after taxes was $25,000. Stockholders recently voted in a new management team that has promised to lower costs and get the ROE up to 15%. What profit margin would Burger need in order to achieve the 15% ROE, holding everthing else constant?

Answer 1

12.50%