Computer Geeks has sales of $618,900, a profit margin of 13.2 percent, a total asset turnover rate of 1.54, and an equity multiplier of 1.06. What is the return on equity? a. 18.91 percentb. 12.67 percentc. 18.28 percentd. 22.11 percente. 21.55 percent

21.55 percent

Explanation:

Profit margin = Net Income / Net Sales

Net Income = Profit Margin X Net Sales

Net Income = 13.2% X 618,900 = $81,695

Asset Turnover rate = Net Sales / Average total assets

Average total assets = Net Sales / Asset Turnover rate

Average total assets = 618900 / 1.54 = 401,883

Equity Multiplier = Total assets / shareholder's equity

Shareholder's equity = Total Assets / Equity multiplier

Shareholder's equity = 401,833 / 1.06 = $379,135

Return on Equity = net Income / shareholder's equity

Return on Equity = 81,695 / 379135 = 0.2155 = 21.55%