Question

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Company has an ROA of 8.4 percent, a profit margin of 9.50 percent, and an ROE...

Company has an ROA of 8.4 percent, a profit margin of 9.50 percent, and an ROE of 15.50 percent.

Requirement 1:

What is the company’s total asset turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Total asset turnover

times

Requirement 2:

What is the equity multiplier? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Equity multiplier

times

Solutions

Expert Solution

ROA=Net income/Total assets

Net income=0.084*Total assets

Profit margin=Net income/Sales

Net income=0.095*Sales

ROE=Net income/equity

Net income=0.155*Equity

Total asset turnover=Sales/Total assets

=(Net income/0.095)/(Net income/0.084)

=0.88 times(Approx)

Equity multiplier=Total assets/equity

=(Net income/0.084)/(Net income/0.155)

=1.85 times(Approx)

jeff jeffy answered 2 years ago

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