Decomposed into equity multiplier and asset turnover

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Reference no: EM131984707

Testcom Corp. has net income of $1.95 million, an effective tax rate of 35%, interest expense of $400,000, an asset turnover of 2, and $14 million in total assets, of which $7 million is debt. Use the DuPont system to calculate its ROE, decomposed into equity multiplier, asset turnover, profit margin. Hint: Net Income = (EBIT - Interest) * (1- Tax Rate).

Reference no: EM131984707

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