Profit margin = 4.5%, assets turnover = 2.2 times, equity multiplier = 2.7 times then return on equity will be
A. 26.73%
B. 25.73%
C. 9.40%
D. 9.00%
Answer: Option A
Solution (By Examveda Team)
Return on Equity (ROE) = Net Profit Margin x Asset Turnover Ratio x Equity Multiplier.= 4.5% x 2.2 x 2.7
= 26.73%

Explain please