Answer: As per DuPont Analysis, ROE = Profit margin * Total Asset Turnover * Equity Multiplier Profit Margin = 8% Total Asset Turnover = Sales / Total Assets Total Assets = Current Asset + Fixed Asset Total Assets = $2 Million + $6 Million Total Assets = $8 Million Total Asset Turnover = 8 Million / 8 Million Total Asset Turnover = 1.0 Equity Multiplier = Total Assets/ Total Equity Total Equity = Total Assets – Total Liabilities Total Liabilities = Current Liabilities + Long term Debt Net Working Capital (NWC) = Current Assets – Current Liabilities $1 Million = $2 Million – Current Liabilities Current Liabilities = $1 Million Total Liabilities = $1 Million + $3 Million Total Liabilities = $4 Million Total Equity = $8 Million - $4 Million = $4 Million Equity Multiplier = 8 Million / 4 Million Equity Multiplier = 2.0 ROE = 8% * 1.0 * 2.0 ROE = 16% Solution Answer: As per DuPont Analysis, ROE = Profit margin * Total Asset Turnover * Equity Multiplier Profit Margin = 8% Total Asset Turnover = Sales / Total Assets Total Assets = Current Asset + Fixed Asset Total Assets = $2 Million + $6 Million Total Assets = $8 Million Total Asset Turnover = 8 Million / 8 Million Total Asset Turnover = 1.0 Equity Multiplier = Total Assets/ Total Equity Total Equity = Total Assets – Total Liabilities Total Liabilities = Current Liabilities + Long term Debt Net Working Capital (NWC) = Current Assets – Current Liabilities $1 Million = $2 Million – Current Liabilities Current Liabilities = $1 Million Total Liabilities = $1 Million + $3 Million Total Liabilities = $4 Million Total Equity = $8 Million - $4 Million = $4 Million Equity Multiplier = 8 Million / 4 Million Equity Multiplier = 2.0 ROE = 8% * 1.0 * 2.0 ROE = 16%.