Question

If jPhone, Inc., has an equity multiplier of 1.67, total asset turnover of 1.45, and a profit margin of 5.9 percent, what is its ROE

Answer 1

To find the Return on Equity (ROE), multiply the profit margin by the total asset turnover and the equity multiplier. The ROE for jPhone, Inc. is 14.5%.

Step-by-step explanation:

To find the Return on Equity (ROE), we need to multiply the profit margin by the total asset turnover and the equity multiplier.

The profit margin is given as 5.9 percent, which is 0.059 as a decimal.

The total asset turnover is given as 1.45, and the equity multiplier is given as 1.67.

The formula for ROE is: ROE = Profit Margin * Total Asset Turnover * Equity Multiplier.

Plugging in the given values, we have: ROE = 0.059 * 1.45 * 1.67 = 0.145.

Therefore, the ROE for jPhone, Inc. is 0.145 or 14.5%.