Primavera holdings has a profit margin of 25%, an asset turnover of 0.5 and financial leverage
(asset to equity) of 1.5. Primavera has $20 billion in assets, half of which is in cash and
marketable securities, assume that Primavera earns 3% after-tax return on cash and securities.
What would Primavera's return on equity be if it paid out 90% of its cash and marketable
securities as dividend to shareholders
a. negative
b. greater than 60%
c. between 40% and 60%
d. Between 0% and 20%
e. Between 20% and 40%.
Primavera holdings has a profit margin of 25, an asset turnover of .pdf
1. Primavera holdings has a profit margin of 25%, an asset turnover of 0.5 and financial leverage
(asset to equity) of 1.5. Primavera has $20 billion in assets, half of which is in cash and
marketable securities, assume that Primavera earns 3% after-tax return on cash and securities.
What would Primavera's return on equity be if it paid out 90% of its cash and marketable
securities as dividend to shareholders
a. negative
b. greater than 60%
c. between 40% and 60%
d. Between 0% and 20%
e. Between 20% and 40%
