Last year Harrington Inc.had sales of $325,000 and a net income of $19,000,and its year-end assets were $250,000.The firm's total-debt-to-total-capital ratio was 45.0%.The firm finances using only debt and common equity and its total assets equal total invested capital.Based on the DuPont equation,what was the ROE?
A)13.82%
B)14.51%
C)15.23%
D)16.00%
E)16.80%

Question

Quizplus · Accepted Answer

ROE = Net income / Sales * Sales / Total assets * Total assets / Total invested capital * Total invested capital / Total equity= 19,000 / 325,000 * 325,000 / 250,000 * 250,000 / (250,000 * (1 - 0.45)) * (250,000 * (1 - 0.45)) / 250,000 * (1 - 0.45)= 13.82%

Last Year Harrington Inc