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Precision Aviation had a profit margin of 6.25%, a total assets turnover of 1.5, and an equity multiplier of 1.8. What was the firm's ROE

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Answer: 16.88%

Explanation:

Going by the Dupont 3 step method to calculate Return on Equity, the formula for ROE is:

ROE = Net Profit Margin * Assets turnover * Equity Multiplier

= 6.25% * 1.5 * 1.8

= ‭0.16875‬

= 16.88%

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