ROE can be calculated using the DuPont formula, which is:
ROE = Net Income / Stockholder’s Equity
ROE = (net income / sales) × (sales / total assets) × (total assets / stockholders’ equity)
Therefore: ROE = (5,700,000 / 75,000,000) × (75,000,000 / 135,000,000) × (135,000,000 / 60,000,000) = (0.076) × (0.556) × (2.25) = 0.095 = 9.50%.
