A company has sales of $640,000, net profit after taxes of $23,000, a total asset turnover of 4.17 and an equity multiplier of 1.67.What is the return on equity?
A)24%
B)9.0%
C)8.1%
D)4.5%

Name: A company has sales of $640,000, net profit after taxes of $23,000, a total asset turnover of 4.17 and an equity multiplier of 1.67.What is the return on equity? A)24% B)9.0% C)8.1% D)4.5%
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Quizplus · Accepted Answer

ROE = Net profit after taxes / Shareholder's equity= 23,000 / (640,000 / 4.17 * 1.67)= 23,000 / 400,000= 0.0575= 5.75%

A Company Has Sales of $640,000, Net Profit After Taxes