Ah! Thanks this is clear..i think i was over thinking it.
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Derrick Durbin
Controller
Graham NC
United States
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Original Message:
Sent: 04-25-2021 01:29 AM
From: MENGLUN LI
Subject: CMA Part 2
Hi Derricka,
It is actually about DuPont formula:
Return on Equity = Net Profit Margin × Total Asset Turnover × Financial Leverage Ratio
ROE = 1.25 × 1.40 × (0.90 ÷ 1.40)
ROE = 1.25 × 1.40 × 0.643
ROE = 1.125
Hope it helps!
Regards,
Marisa
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MENGLUN LI
Unemployed
Boston MA
United States
Original Message:
Sent: 04-24-2021 01:15 PM
From: Derrick Durbin
Subject: CMA Part 2
Hello,
Would someone be able to explain why they use the figures presented in the explanation? It's not clear whether those are arbitrary or not as a starting point to solve the problem.
Thank you!!!