Total assets= $1M debt ratio=30% sales=$2.5m Fixed assets= 41m EBIT= $50,000 Cost of debt= 10% Tax 40% calculate ROE a…8% b. 1.2% c.1.5% d. 1.7%

I was thinking about using DuPont: ROE = (NetIncome/Sales)*(Sales/TotalAssets)*(TotalAssets/Equity) But then saw it was not necessary: NetIncome = (EBIT-interest)*(1-tax)=(50,000-0.3*1mil*10%)*(1-0.4)=(50,000-30,000)*0.6=12,000 Equity = 1,000,000*(1-0.3)=700,000 ROE = 12,000/700,000=1.7% -> D

you are smart. i failed it because my mind was just stuck on Du port. can you try the QM questions that i posted. i had trouble with them i just want to see if there is a better way of doing them

There are lIke 5 ways to get ROE, the 2 longest formulas are the Dupont and the extended Dupont. Know also that ROA can be broken down into 4 things and I could see the CFAIA asking you to get ROA and then add leverage to get ROE