Henderson's Hardware has an ROA of 8%, a 4.5% profit margin, and an ROE of 25%. What is its total assets turnover? Round your answer to two decimal places. What is its equity multiplier? Round your answer to two decimal places.

Total assets turnover is 1.78

The equity multiplier is 3.12

Explanation:

return on assets 8%; profit margin 4.5%; return on equity 25%

ROA can be calculated: ROA = profit margin x total assets turnover

so total assets turnover = ROA / PM = 8% / 4.5% = 1.78

ROE can be calculated: ROE = profit margin x total assets turnover x equity multiplier

so equity multiplier = ROE / (PM x TATO) = 25% / (4.5% x 1.78) = 3.12