Total assets = 123,800
Sales = 130,000
Net Income = 7100
Net profit margin = Net Income/Sales = 7100/130000
Asset turnover ratio = Sales/Total assets = 130000/123800
Equity multiplier = 1+ Debt-equity ratio = 1+0.65 = 1.65
As per Du-Pont Equation
Return on Equity (ROE) = Net Profit margin * Asset turnover ratio * Equity Multiplier
Return on Equity (ROE) = 7100/130000 * 130000/123800 * 1.65
Return on Equity(ROE ) = 0.0946 = 9.46% (Rounded to 2 decimals)
