The cavo company has an roa of 9.8 percent, a profit margin of 12.25 percent, and an roe of 18.25 percent. What is the company's total asset turnover? (do not round intermediate calculations and round your answer to 2 decimal places,

e. G., 32.16.) total asset turnover times what is the equity multiplier? (do not round intermediate calculations and round your answer to 2 decimal places,

e. G., 32.16.) equity multiplier times

Question

Business

Zoey Myers

27 August, 05:03

The cavo company has an roa of 9.8 percent, a profit margin of 12.25 percent, and an roe of 18.25 percent. What is the company's total asset turnover? (do not round intermediate calculations and round your answer to 2 decimal places,

e. G., 32.16.) total asset turnover times what is the equity multiplier? (do not round intermediate calculations and round your answer to 2 decimal places,

e. G., 32.16.) equity multiplier times

+1

Answers (1)

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Marshall Owens · Answer 1

(a) As per Du-Pont equation:

Return on Assets (ROA) = Net profit margin * Total assets turnover

9.8% = 12.25% * total asset turnover

Total asset turnover = 0.098/0.1225 = 0.8

Total asset turnover = 0.80

(b) As per Du-Pont equation:

ROE = Net profit margin * total asset turnover 8 * Equity Multiplier

18.25% = 12.25%*0.8 * Equity Multiplier

Equity multiplier = 0.1825 / (0.1225*0.8) = 1.86

Equity multiplier = 1.86 times