Refer to the facts described inBE 5-15. Show the DuPont framework's calculation of the three components of
Question:
In BE 5-15, the 2011 income statement for Anderson TV and Appliance reported sales revenue of $420,000 and net income of $65,000. Average total assets for 2011 was $800,000. Shareholders' equity at the beginning of the year was $500,000 and $20,000 was paid to shareholders as dividends. There were no other shareholders' equity transactions that occurred during the year. Calculate the profit margin on sales, return on assets, and return on shareholders' equity for 2011.
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Return on equity Profit margin X Asset turnover X Equit...View the full answer
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Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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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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