Answer:
e. 28.57%
Step-by-step explanation:
As we know that
Return on assets = (Net income) ÷ (average of total assets)
Return on Equity = Net income ÷ Equity
Total asset turnover = (Sales ÷ Total assets)
Plus the DuPont analysis formula is
ROE = Profit margin × Total assets turnover × Equity multiplier
where,
Equity multiplier = Total assets ÷ Equity = ROE ÷ ROA = 1.4
Now the profit margin is
14% = Profit margin × 5 × 1.4
So, the profit margin is 2%
And, the debt ratio is
= Debt ÷ Total assets
So can we write
(Total assets - equity) ÷ (Total assets) = 1
So,
= 1 - equity ÷ total assets
= 1 - 1 ÷ 1.4
= 0.2857