If Roten Rooters, Inc., has an equity multiplier of 1.65, total asset turnover o
ID: 2716692 • Letter: I
Question
If Roten Rooters, Inc., has an equity multiplier of 1.65, total asset turnover of 1.70, and a profit margin of 4.5 percent, what is its ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
If Roten Rooters, Inc., has an equity multiplier of 1.65, total asset turnover of 1.70, and a profit margin of 4.5 percent, what is its ROE? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Explanation / Answer
ROE = Net Profit Margin * Asset Turnover Ratio * Equity Multiplier
= 0.045*1.70*1.65
=.1262
ROE = 12.62%