The company\'s profit margin is percent. (Use year-end figures rather than avera
ID: 2733384 • Letter: T
Question
The company's profit margin is percent. (Use year-end figures rather than average values where appropriate. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) The total asset turnover is times. (Round your answer to 2 decimal places, e.g., 32.16.) The equity multiplier is times. (Round your answer to 2 decimal places, e.g., 32.16.) Using the Du Pont Identity, the company's ROE is percent. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Some recent financial statements for Smolira Golf Corp. follow.Explanation / Answer
Profit margin = Net profit / Sales * 100%
= $43,384 / $390,477 * 100%
= 11.11%
Total asset turnover = Sales / Total assets
= $390,477 / $436,000
= 0.90 times
Equity multiplier = Total assets / Total stockholder's equity
= $436,000 / $245,000
= 1.78 times
ROE = Profit margin * Total asset turnover * Equity multiplier
= 11.11% * 0.90 * 1.78
= 17.80%