{"id":53287,"date":"2024-04-15T23:51:47","date_gmt":"2024-04-15T23:51:47","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=53287"},"modified":"2024-04-15T23:51:47","modified_gmt":"2024-04-15T23:51:47","slug":"profit-margin-4-5-assets-turnover-2-2-times-equity-multiplier-2-7-times-then-return-on-equity-will-be","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/profit-margin-4-5-assets-turnover-2-2-times-equity-multiplier-2-7-times-then-return-on-equity-will-be\/","title":{"rendered":"Profit margin = 4.5%, assets turnover = 2.2 times, equity multiplier = 2.7 times then return on equity will be"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a9751090f1e8\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"true\">\r\n                    26.73%                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    25.73%                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    9.40%                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    9.00%                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is A. 26.73%.<\/p>\n<p>Return on equity (ROE) is a measure of how profitable a company is relative to its equity. It is calculated by dividing net income by shareholders&#8217; equity.<\/p>\n<p>Net income is the company&#8217;s profit after taxes. It is calculated by taking revenue and subtracting expenses, including cost of goods sold, operating expenses, and interest expense.<\/p>\n<p>Shareholders&#8217; equity is the company&#8217;s total assets minus its total liabilities. It is the amount of money that would be left over if the company sold all of its assets and paid off all of its debts.<\/p>\n<p>The formula for ROE is:<\/p>\n<p>ROE = Net Income \/ Shareholders&#8217; Equity<\/p>\n<p>In this case, the profit margin is 4.5%, the assets turnover is 2.2 times, and the equity multiplier is 2.7 times. This means that for every $1 of sales, the company makes $0.045 in profit. For every $1 of assets, the company generates $2.20 in sales. And for every $1 of equity, the company has $2.70 in assets.<\/p>\n<p>To calculate ROE, we can use the following formula:<\/p>\n<p>ROE = (Net Income \/ Shareholders&#8217; Equity) * (Assets Turnover) * (Equity <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> Multiplier)<\/p>\n<p>ROE = (0.045) * (2.2) * (2.7) = 26.73%<\/p>\n<p>Therefore, the return on equity for this company is 26.73%. This means <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> that for every $1 of equity, the company generates $0.2673 in profit.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Join Our 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