If Roten Rooters, Inc., has an equity multiplier of 1.65, total asset turnover of 1.70, and a profit margin of 4.5 percent, what is its ROE?

If Roten Rooters, Inc., has an equity multiplier of 1.65, total asset turnover of 1.70, and a profit margin of 4.5 percent, what is its ROE?

Explanation

Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation.

ROE = (PM)(TAT)(EM)

ROE = (.045)(1.70)(1.65)

ROE = .1262, or 12.62%

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