After reviewing the firm’s financial statements, it was determined that the firm’s ROE was 15%. The debt ratio is 30%, and the total asset turnover TAT, is 2.4 times.
What is the profit margin? Follow the steps below.
First you must determine the equity ratio ______%, and once you know the equity ratio, use it to find the Equity Multiplier, EM=_______.
Now use the EM to find ROA. ROA=_______% Now you can calculate the profit margin. PM=_______%