The Cavo Company has an ROA of 8.7 percent, a profit margin of 8.75 percent, and an ROE of 14.75 percent. Requirement 1: What is the company’s total asset turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Total asset turnover times Requirement 2: What is the equity multiplier? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Equity multiplier times Explanation: 1. One equation to calculate ROA is: ROA = (Profit margin)(Total asset turnover) We can solve this equation to find total asset turnover as: 0.087 = 0.0875(Total asset turnover) Total asset turnover = 0.99 times 2. Now, solve the ROE equation to find the equity multiplier which is: ROE = (ROA)(Equity multiplier) 0.1475 = 0.087(Equity multiplier) Equity multiplier = 1.70 times

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