If jPhone, Inc., has an equity multiplier of 1.40, total asset turnover of 1.58, and a profit margin of 7 percent.
| Required: | |
What is the company's ROE?(Do not round intermediate calculations.Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).) |
| ROE | % |
Explanation:
| With the information given, we must use the Du Pont identity to calculate return on equity. Doing so, we find: | |
| ROE | = | (Profit margin)(Total asset turnover)(Equity multiplier) |
| ROE | = | (.07)(1.58)(1.40) |
| ROE | = | .1548, or 15.48% |