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Hendersons Hardware has an ROA of 13%, a 5.5% profit margin, and an ROE of 24%. What is its total assets turnover? Do not ro
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Answer #1

ROA=Net income/Total assets

Net income=0.13*Total assets

Profit margin=Net income/Sales

Net income=0.055*Sales

ROE=Net income/Equity

Net income=0.24*Equity

Total asset turnover=Sales/Total assets

=(Net income/0.055)/(Net income/0.13)

=2.36(Approx)

Equity multiplier=Total assets/Equity

=(Net income/0.13)/(Net income/0.24)

=1.85(Approx).

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