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Question

Assume the following relationships for the Brauer Corp.:

 Sales/Total assets 1.5× Return on assets (ROA) 3.0% Return on equity (ROE) 5.0%\begin{array}{ll}\text { Sales/Total assets } & 1.5 \times \\ \text { Return on assets (ROA) } & 3.0 \% \\ \text { Return on equity (ROE) } & 5.0 \%\end{array}

Calculate Brauer's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital.

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In this exercise, we are asked to determine the company's profit margin and debt-to-capital ratio.

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