Morris motors has total assets of $123,800, sales of 130,000, a debt-equity ratio of 0.65, and net income of $7,100. what is the return on equity

Total assets = 123,800

Sales = 130,000

Net Income = 7100

Net profit margin = Net Income/Sales = 7100/130000

Asset turnover ratio = Sales/Total assets = 130000/123800

Equity multiplier = 1 + Debt-equity ratio = 1+0.65 = 1.65

As per Du-Pont Equation

Return on Equity (ROE) = Net Profit margin * Asset turnover ratio * Equity Multiplier

Return on Equity (ROE) = 7100/130000 * 130000/123800 * 1.65

Return on Equity (ROE) = 0.0946 = 9.46% (Rounded to 2 decimals)