Multiple Choice
How much will Gamma Inc.'s equity holders earn given the following information: total asset turnover is 0.85, profit margin is 0.15, and debt-equity ratio is 0.25?
A) 9.15%
B) 9.75%
C) 10.15%
D) 10.60% Given D/E ratio then leverage ratio:
1 + D/E = 1 + 0.25 = 1.25
ROE = PM x TAT x LR = 0.12 x 0.65 x 1.25
Correct Answer:
Verified
Correct Answer:
Verified
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