Question

Precision Aviation had a profit margin of 7.00%, a total assets turnover of 1.4, and an equity multiplier of 1.8. What was the firm's ROE?

Answer 1

Answer:

17.64%

Explanation:

Precision aviation has a profit margin of 7%

The total assets turnover is 1.4

The equity multiplier is 1.8

Therefore the ROE can be calculated as follows

= Total assets turnover × equity multiplier × profit margin

= 1.4 × 1.8 × 7

= 17.64%

Hence the ROE is 17.64%