You are given the following financial ratios for an anonymous company: Net profit margin = 2% Total asset turnover = 5.0 Financial leverage = 5.0 This company’s return on equity is closest to: 5% 10% 50%

This question requires application of DuPont analysis:ROE = (Net profit margin) * (Total asset turnover) * (Financial leverage) = (2%) * (5.0) * (5.0) = 50%

Question Of The Week - Financial Reporting And Analysis (6) - CFA Level 1

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This topic has 1 reply, 1 voice, and was last updated Mar-187:56 am by AdaptPrep.

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- AdaptPrep
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  17 Mar 2018 at 6:54 pm
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  You are given the following financial ratios for an anonymous company:
  Net profit margin = 2%
  Total asset turnover = 5.0
  Financial leverage = 5.0
  This company’s return on equity is closest to:
  - 5%
  - 10%
  - 50%
- AdaptPrep
  Participant
  - Undecided
  21 Mar 2018 at 7:56 am
  Up
  2
  ::
  This question requires application of DuPont analysis:
  
  ROE = (Net profit margin) * (Total asset turnover) * (Financial leverage) = (2%) * (5.0) * (5.0) = 50%
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