Date Posted:07:10:37 02/22/01 Thu Author: Rodolfo Subject: Re: Sample Mid-term question In reply to:
Amy Craig
's message, "Sample Mid-term question" on 08:43:12 02/18/01 Sun
>Does anybody have the answer to question 6 on the
>Spring 2000 sample mid term?
Amy, the answer is b)Total assets turnover is above the industry average:
by looking the dupont equation: ROE=PM*TATO*EM
PM is below average. EM is below average because a low debt ratio implies a low EM (EM= 1/1-DebtRatio). As a result, TATO must be higher for the equiation to hold a ROE above average. Hope that this answer is oportune.
