Question

For fiscal year 2011, Peet’s Coffee and Tea (PEET) had a net profit margin of 4.78%, asset turnover of 1.73, and a book equity multiplier of 1.21.
a. Use this data to compute Peet’s’ ROE using the DuPont Identity.
b. If Peet’s managers wanted to increase its ROE by one percentage point, how much higher would their asset turnover need to be?
c. If Peet’s net profit margin fell by one percentage point, by how much would their asset turnover need to increase to maintain their ROE?



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  • CreatedJuly 27, 2014
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