Answered: A firm has a profit margin of 3% and an…

A firm has a profit margin of 3% and an equity multiplier of 1.9. Its sales are $150 million ,and its total assets of $60 million. What is the ROE?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 5P: Needham Pharmaceuticals has a profit margin of 3% and an equity multiplier of 2.0. Its sales are...

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A firm has a profit margin of 3% and an equity multiplier of 1.9. Its sales are $150 million ,and its total assets of $60 million. What is the ROE?

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Step 1: Calculate the asset turnover ratio as follows:

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Step 2: Calculate the return on equity (ROE) as follows:

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