Let's solve the problem step-by-step: ### Step 1: **Calculate Profit Margin and Return on Investment** **Given:** - Net income = $9,000 - Total sales = $150,000 - Total asset turnover = 3 **Formulas:** - **Profit Margin = (Net Income / Sales) × 100** - **Return on Investment (ROI) = Profit Margin × Total Asset Turnover** **Calculations:** - Profit Margin = ($9,000 / $150,000) × 100 = 0.06 × 100 = **6%** - ROI = Profit Margin × Total Asset Turnover = 6% × 3 = **18%** **Explanation:** Profit margin tells us the percentage of sales that turned into profit. ROI shows how efficiently the company is using its assets to generate profit. --- ### Step 2: **Calculate Return on Equity** **Given:** - Equity multiplier = 1.2 **Formula:** - **Return on Equity (ROE) = ROI × Equity Multiplier** **Calculation:** - ROE = 18% × 1.2 = **21.6%** **Explanation:** Return on equity shows the return generated on shareholders' equity, taking into account the leverage (equity multiplier). --- ### **Match with the Options:** - A. 6% = Profit margin - B. 18% = Return on investment - C. 21.6% = Return on equity --- ## **Final Answer:** - A: I (Profit margin) = **6%** - B: II (Return on investment) = **18%** - C: III (Return on equity) = **21.6%**