Exercise 5-26 DuPont analysis [LO5-10] The following condensed information was reported by Peabody Toys, Inc., for 2016 and 2015:

($ in 000s)

2016

2015

Income statement information

Net sales

$

6,500

$

5,500

Net income

450

150

Balance sheet information

Current assets

$

930

$

880

Property, plant, and equipment (net)

2,270

1,920

Total assets

$

3,200

$

2,800

Current liabilities

$

1,670

$

1,390

Long-term liabilities

880

880

Paid-in capital

300

300

Retained earnings

350

230

Liabilities and shareholders equity

$

3,200

$

2,800

Required:

1.

Determine the following components of the DuPont framework for 2016:

Profit Margin (%)
	Choose Numerator:	0	Choose Denominator:	=	Profit Margin
	Net income	0	Net sales	=	Profit Margin
	$450	0	$6,500	=	6.92%
Asset Turnover
	Choose Numerator:	0	Choose Denominator:	=	Return on Assets
	Net income	/	Average total assets	=	Return on assets
	$450	/	$3,000	=	0.15
Equity Multiplier
	Choose Numerator:	0	Choose Denominator:	=	Return on Assets
		/		=	Return on assets
		/		=
Return on Shareholders' Equity (%)
	Choose Numerator:	0	Choose Denominator:	=	Return on Shareholders' Equity
		/		=	Return on shareholders' equity

2.	Write an equation that relates these components in calculating ROE. Use the Peabody Toys data to show that the equation is correct. (Round your answers to 2 decimal points.)

Profit margin		Asset turnover		Equity multiplier	=	ROE