Because of the retirement of the bonds is done by spending cash, the total assets of the company will decrease. This decrease in total assets will increase the asset turnover ratio.
Financial leverage relates to the amount of debt that a company uses for its financing. As the amount of debt decreases, the leverage of the company will decrease. The fact that the bonds will be retired at 103.5% of the face value is not relevant to this question.
Because the bonds will be retired there will be less interest expense which will increase net income. This increase in net income will cause the return on owners equity to increase.
Because the amount of debt will be decreased and their will be no change in equity, the debt-equity ratio will decrease.
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If the bonds can be retired at 103.5%, the