Stroud Sporting Gear Inc. has a net profit margin of 6%, a total asset turnover of...

Stroud Sporting Gear Inc. has a net profit margin of 6%, a total asset turnover of 2.5, total assets of $250 million, and total equity of $125 million. What is the company’s return on equity?

Expert Solution

Equity multiplier = asset/equity = 250/125 = 2

DUPONT

ROE = Net profit margin*total asset turnover*equity multiplier

ROE%=0.06*2.5*2

ROE% = 30

jeff jeffy answered 2 years ago

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