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DuPONT AND ROE A firm has a profit margin of 7% and an equity multiplier of 2.1. Its sales are $300 million, and it has...

DuPONT AND ROE

A firm has a profit margin of 7% and an equity multiplier of 2.1. Its sales are $300 million, and it has total assets of $180 million. What is its ROE? Do not round intermediate calculations. Round your answer to two decimal places.

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Answer #1

Total asset turnover=Sales/Total asset

=300/180=1.67

ROE=Profit margin*Total asset turnover*equity multiplier

=7*1.67*2.1

=24.5%

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