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Rogers Radiators has net income of $48,200, sales of $947,100, a capital intensity ratio of .87, and an equity multiplier of 1.53. What is the return on equity

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eooyibo123

Answer:

ROE= 6%

Explanation:

Return on equity is the measure of a business profitability as related the owner's equity. It shows how well a company is making profits on shareholder funds.

Return on investment (ROE)= Profit Margin * Capital intensity ratio * Equity multiplier

To calculate the profit margin

Profit margin= Net income/Gross Income

Profit margin= 42,800/947,100

Profit margin= 0.045

Substitute in formula for ROE

ROE= 0.045* 0.87* 1.53

ROE= 0.06= 6%

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