Respuesta :
Answer:
19%
Explanation:
Given: Sales: $325000
Net Income: $19000
Total asset: $250000.
Total debt ratio= 60%
Remember; Dupoint equation´s ROE= [tex]Profit\ margin\times total\ asset\ turnover\times equity\ multiplier[/tex]
Now let´s find out total liability.
We know, Total liability= [tex]Dabt\ ratio\times total\ asset[/tex]
⇒ Total liability= [tex]0.60\times 250000[/tex]
∴ Total liability= $150000.
Now, finding return on asset.
We know, return on asset= [tex]\frac{Net\ income}{Total\ asset}[/tex]
⇒ return on asset= [tex]\frac{19000}{250000}[/tex]
∴ return on asset (ROA)= 0.076
Next finding equity multilier.
Shareholder´s equity= [tex]Total\ asset - Total\ liability[/tex]
⇒ Shareholder´s equity= [tex]250000-150000= \$ 100000[/tex]
∴ Shareholder´s equity= $100000.
Equity multipier= [tex]\frac{Total\ asset}{Sharesholder\ equity}[/tex]
⇒ Equity multipier= [tex]\frac{250000}{100000}[/tex]
∴ Equity multipier= 2.5
Finally, based on the DuPont equation. Finding return on equity (ROE).
ROE= [tex]ROA\times Equity\ multiplier[/tex]
⇒ ROE= [tex]0.076\times 2.5\times 100[/tex]
∴ ROE= [tex]19\%[/tex]
Return on equity ratio is calculated to know how much profit a company can make out of investor´s money. Dupoint analysis is the method to analyze company´s ability to increase it´s ROE.
