6) 6) The gross profit margin and net profit margin for Dana Dairy Products in 2013 were (See Table 2.2) A) 2 percent and 0.9 percent, respectively. B) 2 percent and 1.5 percent, respectively. C) 13 percent and 1.5 percent, respectively. D) 13 percent and 0.9 percent, respectively. 7) The return on total assets for Dana Dairy Products for 2013 was (See Table 2.2) 7) A) 5.5 percent. B) 25 percent. C) 2.5 percent. D) 0.9 percent. 8) 8) The return on equity for Dana Dairy Products for 2013 was (See Table 2.2) A) 0.9 percent. B) 0.6 percent. C) 50 percent. D) 5.6 percent. 9) Using the modified DuPont formula allows the analyst to break Dana Dairy Products return on equity into 3 components: the net profit margin, the total asset turnover, and a measure of leverage (the financial leverage multiplier). Which of the following mathematical expressions represents the modified DuPont formula relative to Dana Dairy Products' 2013 performance? (See Table 2.2) 9) A) 5.6(ROE) = 3.3(ROA) 1.70(Financial leverage multiplier) B) 2.5(ROE) = 5.6(ROA) *0.44(Financial leverage multiplier) C) 4.0(ROE) = 2.0(ROA) 2.00(Financial leverage multiplier) D) 5.6(ROE) = 2.5(ROA) * 2.24(Financial leverage multiplier) 10) As the financial leverage multiplier increases this may result in 10) A) an increase in the net profit margin and return on investment, due to the increase in interest expense as debt increases. B) a decrease in the net profit margin and return on investment, due to the decrease in interest expense as debt decreases. C) an increase in the net profit margin and return on investment, due to the decrease in interest expense as debt decreases. D) a decrease in the net profit margin and return on investment, due to the increase in interest expense as debt increases. Table 2.2 Industry Actual 2013 Dana Dairy Products Key Ratios Actual Average 2012 Current Ratio 13 10 Quick Ratio 0.8 0.75 Aveage collection Period 23 days 30 days Inventory Tumove 21.7 19 Debt Ratio 6479. 50- Tire Inteet Earned 28 5.5 Gross Profit Margin 13.07. 12.09. NetProfit Margin 1.09. 0.52 Return onttal zset 299. 209. Return on Equity 8.29. 40. US$ 100.000 87.000 $13.000 Income Statement Dana Dairy Products For the Year Ended December 31, 2013 Sale Revenue Les Castof Goods Sold Gross Profits Les Operating Expere Operating Profits Les Inteet Expeze NetProfits Before Taxe Les: T (09 Net Profits Afte Taxe $2.000 500 $1.500 600 $900 Balance Sheet Dana Dairy Products December 31, 2013 Assets US$ 1.000 5 900 -350 $14250 Account Receivable Investocie TotalCuent Assets Gross Fixed Assets Les Accumulated Depreciation Net F bied Assets Total Assets $35.000 13250 21.750 $36.000 Liabilitis & toclclolders Equity Account Payable Accu al Total Cuent Liabilitie Long-tem Debt Total Liabilities Common Stock Retained Earrings Total Stockholdes Equit Total Liabilities & Stod holdes Equity US$ 9000 STS $15.675 125 $19.800 1.000 15200 $us 200 $36.000
