In: Finance
Henderson's Hardware has an ROA of 7%, a 6% profit margin, and an ROE of 20%.
What is its total assets turnover? Do not round intermediate calculations. Round your answer to two decimal places.
What is its equity multiplier? Do not round intermediate calculations. Round your answer to two decimal places.
ROA=Net income/Total assets
Net income=0.07*Total assets
Profit margin=Net income/Sales
Net income=0.06*Sales
ROE=Net income/Equity
Net income=0.2*Equity
Total asset turnover=Sales/Total assets
=(Net income/0.06)/(Net income/0.07)
=1.17(Approx)
Equity multiplier=Total assets/equity
=(Net income/0.07)/(Net income/0.2)
=2.86 (Approx)