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25 March, 14:28

Rogers Radiators has net income of $48,200, sales of $947,100, a capital intensity ratio of. 87, and an equity multiplier of 1.53. What is the return on equity

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  1. 25 March, 14:37
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    ROE = 6%

    Explanation:

    Return on equity is the measure of a business profitability as related the owner's equity. It shows how well a company is making profits on shareholder funds.

    Return on investment (ROE) = Profit Margin * Capital intensity ratio * Equity multiplier

    To calculate the profit margin

    Profit margin = Net income/Gross Income

    Profit margin = 42,800/947,100

    Profit margin = 0.045

    Substitute in formula for ROE

    ROE = 0.045 * 0.87 * 1.53

    ROE = 0.06 = 6%
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Home » Business » Rogers Radiators has net income of $48,200, sales of $947,100, a capital intensity ratio of. 87, and an equity multiplier of 1.53. What is the return on equity
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