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Assume jPhone, Inc., has an equity multiplier of 1.42, total asset turnover of 1.71, and a...

Assume jPhone, Inc., has an equity multiplier of 1.42, total asset turnover of 1.71, and a profit margin of 9 percent. What is its ROE? Select one: a. 15.50% b. 25.50% c. 21.85% d. 21.85 e. 17.95%

Solutions

Expert Solution

Given data in the question,

Equity multiplier = 1.42 (Formula = (Total Assets / Total Shareholders Equity))
Total Asset Turnover = 1.71 (Formula = (Net Sales / Total Assets))
Profit Margin = 9% (Formula = (Profit / Sales * 100))
ROE = ? (Formula = (Profit / Shareholder's Equity))

Therefore,
   ( Equity Multipler * Total Asset Turnover * Profit Margin ) = ROE

  



Hence ,



Therefore, Answer is option C or Option D, with the ROE being as 0.2185 or 21.85%

jeff jeffy answered 2 years ago
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