Profit Margin is a ratio of Profit and Sales.
Total assets turnover is a ratio of Total assets and sales.
Equity multiplier is a ratio of Total assets and Equity.
Return on equity (ROE) is a ratio of Profit and Equity
We have following information -
Profit margin = 8%
Total Assets Turnover = 1.5
Equity multiplier = 1.8
ROE = ?
Now, the product of profit margin , total assets turnover and equity multiplier is equal to return on equity(ROE)
by cross multiplication we will get -
This is true.
Thus, ROE = 8%*1.5*1.8 = 21.60%
Question 59 1 pts Precision Aviation had a profit margin of 8.00%, a total assets turnover...
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