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3-11 U S Pow . u DuPont Analysis If Silas 4-Wheeler, Inc., has an ROE of 18 percent, equity mul- tiplier of 2, and a profit m
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Answer #1

Solution:

ROE = profit margin × total asset turnover × Equity multiplier

0.18 =0.1875 × total assets turnover×2

Thus, total asset turnover = 018/(0.1875×2) = 48%

and, Capital intensity = 1/0.48

= 2.08333 times

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