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Answer :
Final answer:
The Return on Equity (ROE) for Roten Rooters, Inc., given an equity multiplier of 1.57, total asset turnover of 1.70, and a profit margin of 6.7 percent, is calculated to be 17.8 percent.
Explanation:
The Return on Equity (ROE) for a company like Roten Rooters, Inc., can be calculated using the Dupont system, which includes the equity multiplier, total asset turnover, and profit margin. In this case, the equity multiplier is 1.57, the total asset turnover is 1.70, and the profit margin is 6.7 percent (or 0.067 when expressed as a decimal).
The formula for ROE using the Dupont system is: Equity Multiplier x Total Asset Turnover x Profit Margin. Substituting the given values we get: 1.57 x 1.70 x 0.067 = 0.178, or 17.8 percent when expressed as a percentage.
Therefore, the ROE for Roten Rooters, Inc., given the provided data, would be 17.8 percent.
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