Q283
Profit margin = 4.5%, assets turnover = 2.2 times, equity multiplier = 2.7 times then return on equity will be
A.
26.73%
AnswerB.
25.73%
C.
9.40%
D.
9.00%
Answer: Option A
Solution
Answer: Option A
Solution:
Return on Equity (ROE) = Net Profit Margin x Asset Turnover Ratio x Equity Multiplier.= 4.5% x 2.2 x 2.7
= 26.73%