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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4542
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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Donaldson & Son has an ROA of 10%, a 2% profit margin and a

Resolved Question:

Donaldson & Son has an ROA of 10%, a 2% profit margin and a return of equity equal to 15%. What is the company's total assets turnover? What is the firm's equity multiplier? Please show the work of how you git the answer. Thank you.
Submitted: 5 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 5 years ago.
Dear Friend,

ROE= ROA x Equity Multiplier

15=10 (Equity Multiplier)
15/10= 1.5 = Equity Multiplier
Therefore, 1.50 is the Equity Multiplier.

ROA= (Profit Margin) (Total asset turnover)
10=2(Total Asset Turnover)
10/2=5= Total Asset Turnover

Therefore, 5 is the Total Asset Turnover.

Hope this helps..
Warm Regards,
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