Question

Northwest Lumber had a profit margin of 5.25%, a total assets turnover of 1.5, and an equity multiplier of 1.8. What was the firm's ROE

Answer 1

Answer:

14.18%

Explanation:

Northwest lumber has a profit margin of 5.25%

The total assets turnover is 1.5

The equity multiplier is 1.8

Therefore the ROE can be calculated as follows

= 5.25 × 1.5 × 1.8

= 14.18%

Hence the ROE is 14.18%