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An analyst has gathered data from two companies in the same industry. Company A Company B Revenues. EBIT Interest expense EBT Taxes Net Income

An analyst has gathered data from two companies in the same industry. Company A Company B Revenues. EBIT

An analyst has gathered data from two companies in the same industry. Company A Company B Revenues. EBIT Interest expense EBT Taxes Net Income Total assets Total debt - Owners' equity 500 35 5 30 10 20 250 100 $150 900 100 0 100 40 60 300 50 250 You are required: 1. Calculate the five components of DuPont analysis for both companies (30 marks) 2. Calculate the ROE for both companies (5 marks) 3. Explain the critical factors that account for the differences in the two companies ROES. (15 marks) Total 50 marks

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To calculate the five components of DuPont analysis for both companies we need the following information Company A Revenues 500 EBIT 35 Interest expense 30 Taxes 10 Total assets 250 Total debt 100 Own... blur-text-image

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