A financial analysis done on a company reveals their net profit margin is 12.2%, total asset turnover

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A financial analysis done on a company reveals their net profit margin is 12.2%, total asset turnover ratio was 7.3%, and the leverage multiplier was 2.10.

a. What is the company's ROE?

b. What does this tell us about the company?

If a company has a concerningly low ROE but the net profit margin and total asset turnover are fine, what may be causing the low ROE?

Related Book For answer-question

Financial Accounting

ISBN: 978-1259103285

5th Canadian edition

Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M

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Posted Date: Mar 21, 2024 12:55 PM

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A financial analysis done on a company reveals their net profit margin is 12.2%, total asset turnover

Question:

Expert Answer:

a To calculate the Return on Equity ROE of the company we can use the DuPont formula which breaks down ROE into three components Profit Margin Total A... View the full answer

Financial Accounting

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