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Vintage, Inc. has a total asset turnover of 0.64 and a net profit margin of 3.23...

Vintage, Inc. has a total asset turnover of 0.64 and a net profit margin of 3.23 percent. The total assets to equity ratio for the firm is 2.0. Calculate Vintage’s return on equity.

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Answer #1

Return on equity for Vintage, Inc. is calculated below using Du Pont Formula:

Return on equity = Equity Multiplier × Assets turnover × Profit margin

                            = 2 × 0.64 × 3.23%

                            = 4.13%

Return on equity for Vintage, Inc. is 4.13%.

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