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Business, 19.02.2020 00:25 dameiranderson

For fiscal year 2017, Costco Wholesale Corporation (COST) had a net profit margin of 2.08%, asset turnover of 3.55, and a book equity multiplier of 3.37. In the same fiscal year, Walmart Inc. had a ROE of 30.05%, a ROA of 15.20%, and a book value of equity of $1.8 Billion. a) Use this data to compute Costco's ROE using the DuPont Identity. [1 point] b) What is Walmart's book value of assets? What is Walmart's book debt-to-equity ratio? assume that total debt includes all current and long-term liabilities) [2 points) c) If Costco's managers wanted to increase its ROE to match Walmart's ROE, how much higher would their net profit margin need to be? Show how Costco could achieve a similar ROE by increasing asset turnover? [3 points] d) Costco's managers realize that they will be unable to increase asset turnover or net profit margin. Nonetheless, Costco's shareholders expect Costco to achieve a similar ROE as Walmart. How much would Costco's debt-to-equity ratio need to change to match Walmart's ROE?[4 points]

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For fiscal year 2017, Costco Wholesale Corporation (COST) had a net profit margin of 2.08%, asset tu...
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