Problem based on equity multiplier


Manufacturer A has a profit margin of 2.0%, an asset turnover of 1.7 and an equity multiplier of 4.9. Manufacturer B has a profit margin of 2.3%, an asset turnover of 1.1 and an equity multiplier of 4.7. How much asset turnover should manufacturer B have to match manufacturer A's ROE?

A) 1.54%

B) 3.00%

C) 3.09%

D) 4.77%

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Accounting Basics: Problem based on equity multiplier
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