Last year Vaughn Corp.had sales of $315,000 and a net income of $17,832, and its year-end assets were $210,000.The firm's total-debt-to-total-assets ratio was 42.5%.Based on the DuPont equation, what was Vaughn's ROE?
A) 14.77%
B) 15.51%
C) 16.28%
D) 17.10%
E) 17.95%

Question

Quizplus · Accepted Answer

The DuPont equation is: ROE = (Net Income / Sales) * (Sales / Assets) * (Assets / Equity)ROE = ($17,832 / $315,000) * ($315,000 / $210,000) * ($210,000 / (1 - 0.425 * $210,000))ROE = 0.0566 * 1.5 * 1.7143ROE = 0.1477 or 14.77%

Last Year Vaughn Corp