Final answer:
Samsung's profit margin is 42.86%, its total asset turnover is 1, equity multiplier is 1.44, and return on equity is 61.76%. The primary reason Samsung's ROE surpasses the industry average is due to its significantly higher profit margin, which leads to greater profitability compared to its peers.
Step-by-step explanation:
Financial Ratios for Samsung
To determine Samsung's profit margin, we divide the net income by the sales: $21,000 / $49,000 = 0.4286 or 42.86%. Samsung's profit margin indicates how much of each dollar in sales is converted into profit.
Total asset turnover is calculated by dividing sales by total assets: $49,000 / $49,000 = 1. This measures the efficiency of Samsung's use of its assets to generate sales.
The equity multiplier is total assets divided by total equity: $49,000 / $34,000 = 1.4412 or approximately 1.44. This ratio measures financial leverage; how much of Samsung's assets are financed by equity as opposed to debt.
To calculate Samsung's return on equity (ROE), we divide net income by total equity: $21,000 / $34,000 = 0.6176 or 61.76%. This ratio indicates how well the company is generating income from its equity investment.
Considering the industry averages, the main factor explaining why Samsung has a greater ROE than the industry is option (b) a higher profit margin. This indicates that Samsung is more proficient in converting sales into actual profit compared to its industry peers.