A formula in financial analysis is: Return on equity = net profit margin * total asset turnover

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A formula in financial analysis is:

Return on equity = net profit margin * total asset turnover * equity multiplier.

Suppose that the equity multiplier is fixed at 4.0, but that the net profit margin is normally distributed with a mean of 3.8% and a standard deviation of 0.4%, and that the total asset turnover is normally distributed with a mean of 1.5 and a standard deviation of 0.2. Set up and conduct a sampling experiment to find the distribution of the return on equity. Show your results as a histogram to help explain your analysis and conclusions. Use the empirical rules to predict the return on equity.

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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