Question

The Taylor Company has an ROA of 6.7 percent, a profit margin of 4.9 percent, and an ROE of 12 percent. What is the company's total asset turnover? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. What is the equity multiplier? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

Answer 1

The Taylor Company's total asset turnover cannot be calculated. The equity multiplier is 1.79.

Step-by-step explanation:

The total asset turnover ratio measures a company's ability to generate sales from its assets. It is calculated by dividing the company's net sales by its average total assets.

In this case, we are not given the company's net sales, so we cannot calculate the total asset turnover ratio.

The equity multiplier is a measure of a company's financial leverage. It is calculated by dividing the company's total assets by its total equity.

Given the ROE and ROA, we can use the DuPont identity to calculate the equity multiplier:

ROE = ROA x Equity multiplier

12% = 6.7% x Equity multiplier

Equity multiplier = 12% / 6.7% = 1.79