Question

Use the DuPont system and the following data to find return on equity.

Leverage ratio 2.2

Total asset turnover 2.0

Net profit margin 5.5%

Dividend payout ratio 31.8



What is the company's return on equity/

Answer 1

ROE=24.2%

Step-by-step explanation:

DuPont Analysis

Return on Equity = Leverage Ratio x Net profit margin x Total asset turnover

ROE = 2.2 * 5.5% * 2.0

ROE=0.242

ROE = 24.2%