Silas 4-Wheeler, Inc. has an ROE of 18 percent, equity multiplier of 2, and a profit...

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Silas 4-Wheeler, Inc. has an ROE of 18 percent, equity multiplier of 2, and a profit...

Silas 4-Wheeler, Inc. has an ROE of 18 percent, equity multiplier of 2, and a profit margin of 18.75 percent. What is Silas 4-Wheeler's total asset turnover and capital intensity? (Round your answers to 2 decimal places.)

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Answer 1

Answer #1

ROE = 18%

Net Income/Equity = 18%

Equity Multiplier = 2

Assets/Equity = 2

hence, Return on Assets = 18%/2 = 9%

Profit Margin = 18.75%

Net Income/Sales = 18.75%

Hence, total asset turnover = Sales/Total Assets

= Return on Assets/Profit Margin

= 9%/18.75%

= 0.48

capital intensity = Total Assets/Sales

= 1/0.48

= 2.0833

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Answer 2

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Silas 4-Wheeler, Inc. has an ROE of 18 percent, equity multiplier of 2, and a profit...

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