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How do you solve for equity multiplier with ROA 10 percent profit margin 2 percent and ROE 15 percent?
Wiki User
∙ 2011-09-11 20:15:37
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
Wiki User
∙ 2011-09-11 20:15:37
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A company has an ROA of 10 percent a 2 percent profit margin and a return on equity equal to 15 percent. What is the companys total asset turnover and what is the firm's equity multiplier?
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
What is profit of 20 percent on 700?
profit of 20 percent on 700 = 14020% of 700= 20% * 700= 20%/100% * 700= 2 * 70= 140
How do you work out percentage profit?
Basically, percent profit is: (selling price - cost) / cost = decimal equivalent of percent profit Ex. If selling price was 4 dollars, and the cost was only 2 dollar, the percent profit is: ( 4 - 2 ) / 2 = 2/2 = 1.0 To convert the resulting decimal equivalent of the percent to an indicated percentage then multiply the value (here 1.0) by 100, or move the decimal point two places rightward. 1.0 = 100% The percentage profit was 100%
What ratio indicated the percentage of each sales dollar that is available to cover fixed costs and to provide profit?
Contribution margin ratio
How do you calculate profit margin percentage?
Your profit margin is your sales price minus your costs. Costs include materials or products, labor cost, taxes and things like water, electricty and gas that are easily forgotten. So suppose you can sell 100 items for 50 dollars, but you need to buy them at 10 dollars, your profit margin could be 40 dollar per product *100 = 4000 dollars, but to sell those 100 products you need to pay a day's wage to your sales clerk, you need to pay for the electricy and the water too. Imagine you're working in an expensive area and it costs 1000 dollars. You're left with a profit of 4000-1000= 3000 dollars.
A company has an ROA of 10 percent a 2 percent profit margin and a return on equity equal to 15 percent. What is the companys total asset turnover and what is the firm's equity multiplier?
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
Doublewide Dealers has an ROA of 10 percent a 2 percent profit margin?
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
If a company's return on equity is 10 percent its profit margin is 5 percent and its asset turnover is 1.57 what is it's equity multiplier?
EQUITY MULTIPLIER=Total Assets / Total Stockholders' Equity
Needham pharmaceuticals has a profit margin of 3 percent and an equity multiplier of 2.0 its sales are 100 million and it has total assets of 50 million what is its roe?
ROE= profit margin × total assets turnover × equity multiplier ROE= ( Net income / sales ) × ( sales / total assets ) × ( total assets / common equity ) ROE= 3% × ( 100/50)×2 ROE = 3% × 4 = 12 %
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?
Company's Total Assets Turnover Ratio is 5 and Equity multiplier is 1.5 times which is cal. as Net Sales/Total Assets and Total Assets/ Shareholder's equity resp. for the two ratios.
A firm has a profit marging of 2 percent and and equity multiplier of 2.0 Its sales are 100 million and it has total assets of 50 million What is its Return on Equity?
ROE= 8%
What is the Return On Equity?
DuPont Corporation created this type of calculation for Return on Equity. This theory breaks down ROE into three distinct elements. This analysis enables the analyst to understand the source of superior (or inferior) returns by comparison with companies in the same industry or even between industries.Formula:ROE DuPont = Profit Margin * Asset Turnover * Equity MultiplierProfit Margin = Net Profit / SalesAsset Turnover = Sales / AssetsEquity Multiplier = Net Profit / Equity
Both return on asset and return on equity measure profitability which one is more useful for comparing two companies why?
Return on asset= profit margin × asset turnover Return on equity= return on asset × equity multiplier so, return on equity is more comprehensive
What is Return on Equity DuPont?
DuPont Corporation created this type of calculation for Return on Equity. This theory breaks down ROE into three distinct elements. This analysis enables the analyst to understand the source of superior (or inferior) returns by comparison with companies in the same industry or even between industries.Formula:ROE DuPont = Profit Margin * Asset Turnover * Equity MultiplierProfit Margin = Net Profit / SalesAsset Turnover = Sales / AssetsEquity Multiplier = Net Profit / Equity
Assume that a company has a profit margin of 6.0 an asset turnover of 3.2 times and a debt to equity ratio of 50 percent what is the return on equity?
50%/6%= 8.3%
What profit margin do furniture retailers have?
According to Chron, the average profit margin for furniture retailers is 2 percent. This is up from other retailers who normally have a 0.5 percent profit margin.
The Rangoon Timber Company has the following relationships SalesTotal Assets equals 2.23 ROA equals 9.69 percent ROE equals 16.4 percent What is Rangoon's Profit Margin and Debt Ratio?
What is given is: sales / total assets = 2.23 ROA = 9.69% ROE = 16.4% Find: profit margin Debt ratio ROA = Net income / total assets = (Net income/ net sales) x (net sales /total assets)) Net income / net sales = ROA / (net sales / total assets) = 0.969 / 2.23 = 0.0435 Net profit margin = net income / net sales = 0.0435 = 4.35 % ROE = net income / total equity = (net income/net sales) x (net sales/ total assets) X (total assets / total equity) Total assets / total equity = ROE / ((net income/net sales) x (net sales/ total assets)) = 0.164 / (0.0435 x 2.23) = 0.164 / 0.097 = 1.69 Equity multiplier = total assets / total equity Equity multiplier = ROE / ROA = 0.164 / 0.0969 = 1.69 Equity multiplier = 1 + debt-to-equity ratio Debto-to-equity ratio = equity multiplier - 1 = 1.69 - 1 = 0.69 Total debt ratio = debt-to-equity ratio / (1+debt-to-equity ratio) = 0.69 / (1+ 0.69) = 0.41
