Ask Question
15 March, 23:47

Northwest Lumber had a profit margin of 6%, a total assets turnover of 1.5, and an equity multiplier of 1.8. What was the firm's ROE? Select the correct answer. a. 16.29% b. 16.47% c. 16.38% d. 16.20% e. 16.56%

+5
Answers (1)
  1. 16 March, 00:21
    0
    Option D is correct (16.20%)

    ROE=16.20%

    Explanation:

    Option D is correct (16.20%)

    The formula we are going to use is:

    ROE=Total Assets Turnover*Profit Margin*equity Multiplier

    Return On Equity (ROE):

    It is the measure of how good company or firm is using its investments to generate earnings. The general Formula for ROE is:

    ROE=Net Income / Shareholder Equity

    In our Case, we will use:

    ROE=Total Assets Turnover*Profit Margin*equity Multiplier

    ROE=6% * 1.5 * 1.8

    ROE=16.20%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Northwest Lumber had a profit margin of 6%, a total assets turnover of 1.5, and an equity multiplier of 1.8. What was the firm's ROE? ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers