What is the Return on equity

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Business Finance

Description

total asset turnover of 1.95; net profit margin of 4.06%; total assets to equity ratio for the firm is 2.4. To get the return on equity, would I have to multiply each of these values together?

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Explanation & Answer

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return on equity is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

Net income ÷ shareholders’ equity

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