Answer :
Final answer:
To calculate the ROE for Rogers, Incorporated, which has an equity multiplier of 1.57, total asset turnover of 1.70, and a profit margin of 6.7%, we use the DuPont Identity. Applying the formula yields an ROE of 17.89%, indicating the company's efficiency in generating profits from shareholders' equity.
Explanation:
If Rogers, Incorporated, has an equity multiplier of 1.57, total asset turnover of 1.70, and a profit margin of 6.7 percent, we can calculate its return on equity (ROE) using the DuPont Identity formula. The DuPont Identity breaks down ROE into three components: profit margin, asset turnover, and equity multiplier. It’s expressed as ROE = Profit Margin × Asset Turnover × Equity Multiplier.
Using the given information:
- Profit Margin = 6.7%
- Asset Turnover = 1.70
- Equity Multiplier = 1.57
Therefore, Rogers, Incorporated’s ROE = 6.7% × 1.70 × 1.57
= 17.89%.
This calculation yields an ROE of 17.89%, illustrating how efficiently Rogers, Incorporated uses equity from shareholders to generate profits.
