BACK NEXT Problem 47 eg 1255 or 1255 The companys equity mul

BACK NEXT Problem 4.7 eg. 12.55 or 12.55%.) The company\'s equity multiplier is Worton Company has a debt to equity rat of 1.7s, ROA of 13.94 percen, and toital equity eof $1,98, 00 io of 1.75, ROA of 13.94 percent, and total equity of $1,938,000. What are the company\'s equity multiplier, debt ratio, and ROE? (Round answers to 2 decimal places its debt ratio is l and its ROE is Click if you would like to Show Work for this question: Qpen Show Work

Solution

Given Information:-

D/E= 1.75, ROA=13.94, Equity= $1938,000

Thus, D/1938,000=1.75, Debt= $3,391,500

Total Asset= Debt +equity= $1938000+3391500= $5,329,500

Equity multiplier = total Asset/ Equity= $5329500/1938000=2.75

Debt Ratio= total Debt/ total Asset= $3391500/$5329500=0.64

Since ROA= Net income/Total asset =13.94

Net Income= 13.94/100*5329500= $74,2932.30

ROE= Net income /equity= $74293230/$ 1938000=3.83