Question

Please use the data for Company ABC below to answer questions: Financial Leverage Multiplier = 2.00...

Please use the data for Company ABC below to answer questions:
Financial Leverage Multiplier = 2.00

Net Profit Margin = 0.03

Total Asset Turnover = 1.50

1) What is the company's ROA?

2) What Is the company's ROE?

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Answer #1

rate positively ..

Ans 1 ROA =
Net profit margin * Asset turnover
.03*1.5
4.50%
Ans 2 ROE=
Net profit margin * Asset turnover *Financial leverage multiplier
.03*1.5*2
9.00%
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