In: Finance
Gardial & Son has an ROA of 12%, a 5% profit margin, and a return on equity equal to 20%.
What is the company's total assets turnover?
What is the firm's equity multiplier?
(Please show steps and you may use a financial calculator formula as well).
a. Total asset turnover = ROA / Profit margin = 0.12 / 0.05 = 2.4 times
b. Equity multiplier = ROE / ROA = 0.20 / 0.12 = 1.67 times