If Wilkinson, Inc., has an equity multiplier of 1.61, total asset turnover of 2.
ID: 2738679 • Letter: I
Question
If Wilkinson, Inc., has an equity multiplier of 1.61, total asset turnover of 2.3, and a profit margin of 4.1 percent, what is its ROE? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) ROE %___
The financial ratio measured as net income divided by sales is known as the firms:
return on assets.
profit margin.
earnings before interest and taxes.
asset turnover.
return on equity.
The financial ratio that measures the accounting profit per dollar of book equity is referred to as the:
profit margin.
return on equity.
market profit-to-book ratio.
price-earnings ratio.
equity turnover
Puffy's Pastries generates five cents of net income for every $1 in equity. Thus, Puffy's has _______ of 5 percent.
a price-earnings ratio
a profit margin
a return on equity
a return on assets an EV multiple
If stockholders want to know how much profit the firm is making on their entire investment in that firm,
the stockholders should refer to the:
return on assets.
earnings per share.
return on equity.
profit margin.
equity multiplier
Explanation / Answer
DuPont Identity
ROE = Profit Margin (Profit/Sales) * Total Asset Turnover (Sales/Assets) * Equity Multiplier (Assets/Equity)
4.1*2.3*1.61=15.18%
The financial ratio measured as net income divided by sales is known as the firms: Profit Margin on Sales
The financial ratio that measures the accounting profit per dollar of book equity is referred to as the: Return on equity
Puffy's Pastries generates five cents of net income for every $1 in equity. Thus, Puffy's has ROE of 5 percent.
If stockholders want to know how much profit the firm is making on their entire investment in that firm,
the stockholders should refer to the: return on assets.
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