Question

Precision Aviation had a profit margin of 8.50%, a total assets turnover of 1.5, and an equity multiplier of 1.8. What was the firm's ROE?

Answer 1

Explanation:

We can use the DuPont model to calculate the ROE (Return on Equity):

ROE = Profit margin * Total assets turnover * Equity multiplier

Substituting the given values, we get:

ROE = 0.085 * 1.5 * 1.8 = 0.2295 or 22.95%

Therefore, Precision Aviation's ROE was 22.95%.