Using the Du Pont method, evaluate the effects of the following relationships for the Butters Corporation.
a. Butters Corporation has a profit margin of 7 percent and its return on assets (investment) is 25.2 percent. What is its assets turnover?
b. If the Butters Corporation has a debt-to-total-assets ratio of 50 percent, what would the firm’s return on equity be?
c. What would happen to return on equity if the debt-to-total-assets ratio decreased to 35 percent?