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FIN3702 Assignment
2 (COMPLETE
ANSWERS) Semester
1 2026 - DUE10 April
2026
NO PLAGIARISM
[Pick the date]
[Type the abstract of the document here. The abstract is typically a short summary of the contents of
the document. Type the abstract of the document here. The abstract is typically a short summary of
the contents of the document.]
, xam (elaborations)
FIN3702 Assignment 2 (COMPLETE
ANSWERS) Semester 1 2026 - DUE10 April
2026
2025/2026
FIN3702 Assignment 2 (COMPLETE ANSWERS) Semester 1 2026 - DUE10
April 2026; 100% TRUSTED Complete, trusted solutions and explanations.
Ensure your success with us.
Determine the expected return on equity under the tight aggressive current
assets policy in which current assets are 45 per cent of projected sales
Determine the expected return on equity under the moderate current assets
policy in which 50 per cent of sales are tied up in current assets
To determine the Return on Equity (ROE) under different current asset policies, we must
analyze how the level of investment in current assets affects the total asset base, which in turn
influences the equity required (assuming a specific debt-to-equity ratio or total financing
structure).
While your prompt provides the current asset percentages, a definitive ROE calculation requires
additional variables such as Projected Sales, Net Profit Margin, and the Equity Base (or
Debt/Equity ratio).
However, I will demonstrate the relationship using the standard DuPont identity and the impact
of asset turnover on returns.
1. The Underlying Formula
The ROE can be expressed as:
$$ROE = \frac{\text{Net Income}}{\text{Total Equity}}$$
Alternatively, using the relationship between Total Assets ($TA$) and current assets:
$$ROE = \frac{\text{Net Income}}{\text{Sales}} \times \frac{\text{Sales}}{\text{Total
Assets}} \times \frac{\text{Total Assets}}{\text{Total Equity}}$$
2. Scenario Analysis
FIN3702 Assignment
2 (COMPLETE
ANSWERS) Semester
1 2026 - DUE10 April
2026
NO PLAGIARISM
[Pick the date]
[Type the abstract of the document here. The abstract is typically a short summary of the contents of
the document. Type the abstract of the document here. The abstract is typically a short summary of
the contents of the document.]
, xam (elaborations)
FIN3702 Assignment 2 (COMPLETE
ANSWERS) Semester 1 2026 - DUE10 April
2026
2025/2026
FIN3702 Assignment 2 (COMPLETE ANSWERS) Semester 1 2026 - DUE10
April 2026; 100% TRUSTED Complete, trusted solutions and explanations.
Ensure your success with us.
Determine the expected return on equity under the tight aggressive current
assets policy in which current assets are 45 per cent of projected sales
Determine the expected return on equity under the moderate current assets
policy in which 50 per cent of sales are tied up in current assets
To determine the Return on Equity (ROE) under different current asset policies, we must
analyze how the level of investment in current assets affects the total asset base, which in turn
influences the equity required (assuming a specific debt-to-equity ratio or total financing
structure).
While your prompt provides the current asset percentages, a definitive ROE calculation requires
additional variables such as Projected Sales, Net Profit Margin, and the Equity Base (or
Debt/Equity ratio).
However, I will demonstrate the relationship using the standard DuPont identity and the impact
of asset turnover on returns.
1. The Underlying Formula
The ROE can be expressed as:
$$ROE = \frac{\text{Net Income}}{\text{Total Equity}}$$
Alternatively, using the relationship between Total Assets ($TA$) and current assets:
$$ROE = \frac{\text{Net Income}}{\text{Sales}} \times \frac{\text{Sales}}{\text{Total
Assets}} \times \frac{\text{Total Assets}}{\text{Total Equity}}$$
2. Scenario Analysis
