Analysis of return on invested assets, comparison of two divisions, DuPont method. Learning World, Inc. has two
Question:
Analysis of return on invested assets, comparison of two divisions, DuPont method. Learning World, Inc. has two divisions: Test Preparation and Language Arts. Results (in millions) for the past three years are partially displayed here:
1. Complete the table by filling in the blanks.
2. Use the DuPont method of profitability analysis to explain changes in the operating-income-to-total- assets ratios over the 2008 through 2010 period for each division and for Learning World as a whole. Comment on theresults.
Operating Operating Total Operating Operating Operating Income Revenues Assets Income/ Revenues! Income/ Оретating Revenues Total Total Assets Assets Test Preparation Division $ 680 $ 7,960 $ 1920 2008 ? 10% 2009 840 42% 2010 1,160 11% Language Arts Department $ 2,360 $ 620 $1,280 2008 3,000 22% 2009 1,800 25% 2010 2,340 Learning World Inc. $1,300 $10,320 $3,200 2008 2009 2010
Step by Step Answer:
Analysis of return on invested assets comparison of two divisions DuPont method 1 2 Based on revenue...View the full answer
Cost Accounting A Managerial Emphasis
ISBN: 978-0136126638
13th Edition
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav
Related Video
The Dupont analysis is an expanded return on equity formula, calculated by multiplying the net profit margin by the asset turnover by the equity multiplier. The DuPont analysis is also known as the DuPont identity or DuPont model.This Video will guide on how to calculate return on Equity and estimate profitability of shareholders using DuPont Analysis.
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