1 DuPont Formula

Calculate ROA, given a profit margin of 2% , total assets of 5,000 and Sales of 1,907.50Show formula and calculations

(Circle One) What is the effect on ROE whenAsset Turnover Increases?

Increase/Decrease

(Circle One) What is the effect on ROE whenProfit Margin Decreases?

Increase/Decrease

(Circle One) What is the effect on ROE when Common Equity in the Equity Multiplier Increases?

Increase/Decrease

(Over)

Problem 2 DuPont Equation

What is the formula for Leverage?

If Leverage increases and profit margin is negative, whathappens to ROE?

Name 2 Assets that are included in the Total Asset Turnover ratio.