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Can you assist with the attached problem on DuPont Analysis? Many thanks Income Statement Data Revenues Operating income Depreciation and amortization Interest expense Pretax income
Can you assist with the attached problem on DuPont Analysis? Many thanks
Income Statement Data Revenues Operating income Depreciation and amortization Interest expense Pretax income Income taxes Net income after tax 2010 2014 Balance Sheet Data Fixed assets Total assets Working capital Total debt Total shareholders' equity 2010 Operating Margin Asset Turnover Interest Burden Financial Leverage Income Tax Rate 2852.63% $542 38 3 3 32 13 19 $979 76 9 0 67 37 30 2014 $41 245 123 16 159 $70 291 157 0 220 (Question 4 is composed of two parts.) The DuPont formula defines the net return on shareholders' equity as a function of the following components: Operating margin Asset turnover Interest burden Financial leverage Income tax rate a. Calculate each of the five components listed above for 2010 and 2014, and calculate the return on equity (ROE) for 2010 and 2014, using all of the five components. Show calculations. b. Briefly discuss the impact of the changes in asset turnover and financial leverage on the change in ROE from 2010 to 2014. Operating Income (revenues) / Net Sales Sales or Revenues / Total Assets EBIT / Interest Expense Total Debt / Shareholders Equity = Effective Tax Rate (%) = Income Tax Expense / Pretax IncomeStep by Step Solution
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