Bamp; c co. has net income of $48,200, sales of $947,100, a capital intensity ratio of .87, and an equity multiplier of 1.53. what is the return on equity? 6.77 percent5.93 percent8.95 percent12.21 percent14.09 percent

Option (C) is correct.

Explanation:

Return on Equity (ROE)  = ?

Using DuPont Model, the Return on Equity (ROE) is calculated by using the following formula :

Return on Equity (ROE):

= Net Profit Margin × Total Asset Turnover × Equity Multiplier

= [Net Income ÷ Sales] × [1 ÷ Capital Intensity Ratio] × Equity Multiplier

= [$48,200 ÷ 947,100] × [1 ÷ 0.87] × 1.53

= 5.0892% × 1.1494 × 1.53

= 8.95%

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answer; ///i believe that the correct answer is (a) it is the means by which a person earns money;