For fiscal year 2015, Costco Wholesale Corporation had a net profit margin of 2.05%, asset turnover of

Question:

For fiscal year 2015, Costco Wholesale had a net profit margin of 2.05%, of 3.48, and a book equity multiplier of 3.15.
a. Use this data to compute Costco's ROE using the DuPont Identity.
b. If Costco's managers wanted to increase its ROE by one percentage point, how much higher would their need to be?
c. If Costco's net profit margin fell by one percentage point, by how much would their need to increase to maintain their ROE?
Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio. Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...