The TRC Bank has a net profit margin of 7.5%,an asset utilization ratio of 18%,and an equity multiplier of 20.What is the bank's ROA?
A)27.00 percent
B)1.35 percent
C)7.50 percent
D)1.50 percent
E)3.6 percent

Question

Quizplus · Accepted Answer

ROA (Return on Assets) = Net Profit Margin * Asset Utilization Ratio
Given, 
Net Profit Margin = 7.5%
Asset Utilization Ratio = 18%
Equity Multiplier = 20
ROA = 7.5% * 18% = 1.35%
Therefore, the correct answer is option B, i.e., 1.35 percent.

The TRC Bank Has a Net Profit Margin of 7