Study guides

☆☆☆

Q: If a company has an Return on Assets of 10 percent a 2 percent profit margin and a return on equity equal to 15 percent what is the company's total assets turnover and the equity multiplier?

Write your answer...

Submit

Still have questions?

Related questions

Given: ROA = 10%, Profit margin = 2%, ROE = 15% ROA = Profit margin x Asset Turnover Therefore, Asset Turnover = ROA / Profit margin = 10 / 2 = 5% ROE = Profit margin x Asset Turnover x Equity multiplier 15 = 2 x 5 x Equity Multiplier 15 / 10 = Equity Multiplier Equity Multiplier = 1.05

EQUITY MULTIPLIER=Total Assets / Total Stockholders' Equity

Equity Multiplier ROA*Equity Multiplier=ROE so, (10%)*(x)=(15%), therefore, Equity Multiplier=15%/10%= 1.5 times Total Asset Turnover Profit Margin*Total Asset Turnover = ROA, so (2%)*(x)=10%, therefore Total Asset Turnover=10%/2%= 5 times

Given: ROA = 10%, Profit margin = 2%, ROE = 15% ROA = Profit margin x Asset Turnover Therefore, Asset Turnover = ROA / Profit margin = 10 / 2 = 5% ROE = Profit margin x Asset Turnover x Equity multiplier 15 = 2 x 5 x Equity Multiplier 15 / 10 = Equity Multiplier Equity Multiplier = 1.05

For a change of p percent, the multiplier is (1+p/100).

0.027

0.7 and 0.2

0.18

ROA = Net Profit Margin * Asset Turnover Asset Turnover = ROA/Profit Margin = 13.5/5 = 2.7%

1.61%

N x 1.15

50%/6%= 8.3%

People also asked