The company\'s profit margin is percent. (Use year-end figures rather than avera
ID: 2739968 • 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.)Explanation / Answer
Answer:
Net profit margin of company = Net profit/sales = 40654/376068 = 0.1081 = 10.81%
Asset turnover ratio-2015 = sales/total assets = 376068/432000 = 0.87 times
Equity multiplier ratio = Total assets/Total equity = 432000/283000 = 1.52
ROE as per Du Pont model = (net income/sales) x equity multiplier ratio x (net income/total equity)
ROE = (40654/376068) x 1.52 x (40654/283000)
ROE = 0.108 x 1.52 x 0.14
ROE = 0.02298 = 2.29