Orange Electronics Inc. has a profitability ratio of 0.14, an asset turnover ratio of 1.7, a debt to equity ratio of 0.60, and a total asset to equity ratio of 1.60. What is the firm's ROE?
A) 14.28%
B) 22.85%
C) 38.08%
D) 41.76%
Answer: C
Explanation: C) The ROE via the DuPont method is the profitability ratio × the total asset turnover × the total asset to equity ratio = 0.14 × 1.7 × 1.6 = 0.3808 = 38.08%
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