Question

34. Northwest Lumber had a profit margin of 5.25%, a total assets turnover of 1.5, and an equity multiplier of 1.8. What was the firm's ROE?

Answer 1

Answer:

14.18%

Explanation:

Calculation for the Return on Equity

Using this formula

Return on equity = Profit margin×Totyal assets turnover × Equity multiplier

Let plug in the formula

Return on equity = 5.25 × 1.5 × 1.8

Return on equity = 14.18%

Therefore the Return on equity will be 14.18%