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Return on Equity when Operating Profit is given Solution

STEP 0: Pre-Calculation Summary
Formula Used
return_on_equity = (Operating Profit Margin*Asset Turnover)-(Interest Expense Rate*Equity Multiplier*Tax Retention)
ROE = (OPM*ATO)-(IER*EM*TR)
This formula uses 5 Variables
Variables Used
Operating Profit Margin- The operating profit margin is a margin ratio used to measure a company's pricing strategy and operating efficiency.
Asset Turnover- Asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue or sales income to the company.
Interest Expense Rate- Interest Expense Rate is the rate of the non-operating expense shown on the income statement.
Equity Multiplier- The equity multiplier is a financial leverage ratio that measures the amount of a firm's assets that are financed by its shareholders by comparing total assets with total shareholder's equity.
Tax Retention- Tax Retention is the mandatory tax placed on income that is earned on investments in a country that is not the resident's home country.
STEP 1: Convert Input(s) to Base Unit
Operating Profit Margin: 15 --> No Conversion Required
Asset Turnover: 5 --> No Conversion Required
Interest Expense Rate: 5 --> No Conversion Required
Equity Multiplier: 2 --> No Conversion Required
Tax Retention: 5 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
ROE = (OPM*ATO)-(IER*EM*TR) --> (15*5)-(5*2*5)
Evaluating ... ...
ROE = 25
STEP 3: Convert Result to Output's Unit
25 --> No Conversion Required
FINAL ANSWER
25 <-- Return on Equity
(Calculation completed in 00.031 seconds)

1 Other formulas that calculate the same Output

Return on Equity when Net Income is given
return_on_equity = Net Income/Total Equity Go

Return on Equity when Operating Profit is given Formula

return_on_equity = (Operating Profit Margin*Asset Turnover)-(Interest Expense Rate*Equity Multiplier*Tax Retention)
ROE = (OPM*ATO)-(IER*EM*TR)

How to Calculate Return on Equity when Operating Profit is given?

Return on Equity when Operating Profit is given calculator uses return_on_equity = (Operating Profit Margin*Asset Turnover)-(Interest Expense Rate*Equity Multiplier*Tax Retention) to calculate the Return on Equity, Return on Equity when Operating Profit is given can be defined as a measure of profitability that calculates how many dollars of profit a company generates with each dollar of shareholders' equity when operating profit is given. Return on Equity and is denoted by ROE symbol.

How to calculate Return on Equity when Operating Profit is given using this online calculator? To use this online calculator for Return on Equity when Operating Profit is given, enter Operating Profit Margin (OPM), Asset Turnover (ATO), Interest Expense Rate (IER), Equity Multiplier (EM) and Tax Retention (TR) and hit the calculate button. Here is how the Return on Equity when Operating Profit is given calculation can be explained with given input values -> 25 = (15*5)-(5*2*5).

FAQ

What is Return on Equity when Operating Profit is given?
Return on Equity when Operating Profit is given can be defined as a measure of profitability that calculates how many dollars of profit a company generates with each dollar of shareholders' equity when operating profit is given and is represented as ROE = (OPM*ATO)-(IER*EM*TR) or return_on_equity = (Operating Profit Margin*Asset Turnover)-(Interest Expense Rate*Equity Multiplier*Tax Retention). The operating profit margin is a margin ratio used to measure a company's pricing strategy and operating efficiency, Asset turnover is a financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue or sales income to the company, Interest Expense Rate is the rate of the non-operating expense shown on the income statement, The equity multiplier is a financial leverage ratio that measures the amount of a firm's assets that are financed by its shareholders by comparing total assets with total shareholder's equity and Tax Retention is the mandatory tax placed on income that is earned on investments in a country that is not the resident's home country.
How to calculate Return on Equity when Operating Profit is given?
Return on Equity when Operating Profit is given can be defined as a measure of profitability that calculates how many dollars of profit a company generates with each dollar of shareholders' equity when operating profit is given is calculated using return_on_equity = (Operating Profit Margin*Asset Turnover)-(Interest Expense Rate*Equity Multiplier*Tax Retention). To calculate Return on Equity when Operating Profit is given, you need Operating Profit Margin (OPM), Asset Turnover (ATO), Interest Expense Rate (IER), Equity Multiplier (EM) and Tax Retention (TR). With our tool, you need to enter the respective value for Operating Profit Margin, Asset Turnover, Interest Expense Rate, Equity Multiplier and Tax Retention and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
How many ways are there to calculate Return on Equity?
In this formula, Return on Equity uses Operating Profit Margin, Asset Turnover, Interest Expense Rate, Equity Multiplier and Tax Retention. We can use 1 other way(s) to calculate the same, which is/are as follows -
  • return_on_equity = Net Income/Total Equity
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