question archive Gardial & Son has an ROA of 9%, a 2% profit margin, and a return on equity equal to 20%
Gardial & Son has an ROA of 9%, a 2% profit margin, and a return on equity equal to 20%
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Gardial & Son has an ROA of 9%, a 2% profit margin, and a return on equity equal to 20%. What is the company's total assets turnover? What is the firm's equity multiplier? Do not round intermediate calculations. Round your answers to two decimal places.
Total assets turnover:
Equity multiplier:
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| Answer | ||||||
| Total Asset Turnover = 4.50 | ||||||
| Equity Multiplier = 2.22 | ||||||
| Dupont Analysis | ||||||
| Retrun on Equity = (Net Profit Margin * Asset Turnover * Equity Multiplier ) | ||||||
| Retrun on Equity = (Return on Asset * Equity Multiplier) | ||||||
| Given | ||||||
| ROA = 9% | ||||||
| Profit Margin = 2% | ||||||
| Return on Equity = 20% | ||||||
| Return on Equity = ROA * Equity Multiplier | ||||||
| Equity Multiplier = (20% / 9% )= 2.22 | ||||||
| Return on Equity = Net Profit Margin * Asset Turnover * Equity Multiplier | ||||||
| Asset Turnover = 20% / ( 2% * 2.22) | ||||||
| Asset Turnover = 4.50 |
