Total sales of 300,000net income of 20,000year end assets were 200,000

QUESTION

Total sales of 300,000net income of 20,000year end assets were 200,000firm debt to total assets ratio was 40%Using the Dupont equation, what is ROE?Can you help solve? Thanks in advance.
Total Sales = $300,000Net Income = $20,000Assets (ending balance) = $200,000Debt to Total Assets Ratio = 40% Using Du Pont Identity: ROE = [Profit Margin * Total Asset Turnover * Equity Multiplier]Profit Margin = [Net Income / Total Sales]Profit Margin = [$20,000 / $300,000] Profit Margin = 0.06667 (or) 6.67% Total Asset Turnover = [Total Sales / Total Assets]Total Asset Turnover = [$300,000 / $200,000] Total Asset Turnover = 1.5 times Equity Multiplier = (1 Debt-equity Ratio)Debt to Toal Assets Ratio = [Total Debt / Total Assets]Debt to Total Assets Ratio = 40%Total Assets = $200,000Total Debt = ?0.40 = [Total Debt / $200,000]Total Debt = [$200,000 * 0.40]Total Debt = $80,000Total Assets = [Total Debt Total Stockholders

]$200,000 = [$80,000 Total Stockholders Equity]Total Stockholders Equtiy = [$200,000 $80,000]Total Stockholders Equity = $120,000Debt-equtiy Ratio = [Total Debt / Total Equity]Debt-equity Ratio = [$80,000 / $120,000]Debt-equity Ratio = 0.6667Equity Multiplier = (1 Debt-equity Ratio)Equity Multiplier = (1 0.667) Equity Multiplier = 1.67 ROE = Profit Margin * Total Asset Turnvoer * Equity MultiplierROE = 6.67% * 1.5 * 1.67ROE = 0.0667 * 1.5 * 1.67ROE = 0.16708 (or) 16.71% ROE = 16.71%

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