N x 1.15
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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
This is a 15% increase.
Increase 75 by 15%: = 75 + (15% * 75)= 75 + 11.25= 86.25
15% of 80 = 80*15/100 = 12 So, an increase of 15% is 80+12 = 92