QuestionDetails: Millers Metalworks, Inc. has a total asset turnover of 2.5 anda

Question

QuestionDetails: Millers Metalworks, Inc. has a total asset turnover of 2.5 anda net profit margin of 3.5%. The total debt ratio for the firm is50%. Calculate Millers return on equity. a) 17.5% b) 19.5% c) 21.5% d) 23.5% QuestionDetails: Millers Metalworks, Inc. has a total asset turnover of 2.5 anda net profit margin of 3.5%. The total debt ratio for the firm is50%. Calculate Millers return on equity. a) 17.5% b) 19.5% c) 21.5% d) 23.5% QuestionDetails: Millers Metalworks, Inc. has a total asset turnover of 2.5 anda net profit margin of 3.5%. The total debt ratio for the firm is50%. Calculate Millers return on equity. a) 17.5% b) 19.5% c) 21.5% d) 23.5%

Explanation / Answer

The answer is A, 17.5% If you plug numbers of 100 for total assets, 50 for total debt, and250 for annual revenue, you get net profit of 8.75. Divide 8.75 by 50 (total equity) and you get 17.5%

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