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11 February, 20:23

Henderson's Hardware has an ROA of 11%, a 8% profit margin, and an ROE of 21%. What is its total assets turnover? Do not round intermediate calculations. Round your answer to two decimal places.

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  1. 11 February, 21:16
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    Total asset turnover = 1.375

    Explanation:

    In this question we use the DuPont analysis which is presented below:

    Return On Assets = Net Profit Margin * Total asset turnover

    0.11 = 0.08 * total assets turnover

    So, the total assets turnover would be

    = 0.11 : 0.08

    = 1.375

    Simply we find out the asset turnover by applying the return on assets formula that is displayed above
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