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i need help with whats highlighted ! Walking down the hall of your office building with a sheaf of papers in her hand, your friend
i need help with whats highlighted !
Walking down the hall of your office building with a sheaf of papers in her hand, your friend and colleague, Chloe, stepped into your office and asked the following Chloe Do you have 10 or 15 minutes that you can spare? You Sure, I've got a meeting in an hour, but I don't want to start something new and then be interrupted by the meeting, so how can I help? Chloe I've been reviewing the company's financial statements and looking for general ways to improve our performance, in general, and the company's return on equity, or ROE, in particular. Eric, my new team leader, suggested that I start by using a DuPont analysis, and I'd like to run my numbers and conclusions by you, to see if I've missed anything Here are the balance sheet and income statement data that Eric gave me, and here are my notes with my calculations Could you start by making sure that my numbers are correct? You Give me a minute to look at these financial statements and to remember what I know about the DuPont analysis Balance Sheet Data $500,000 Accounts payable 1,000,000 Accruals 1,500,000 Notes payable 3,000,000 Income Statement Data Cash Accounts receivable Inventory $600,000 Sales $10,000,000 5,000,000 5,000,000 2,500,000 2,500,000 372,000 2,128,000 744,800 $1,383,200 200,000 Cost of goods sold 800,000 Gross profit 1,600,000ing expenses 2,300,000 EBIT 3,900,000 Interest expense Current assets Current liabilities Long-term debt Total liabilities 525,000EBT 1,575,000 Taxes 2,100,000 Net income Common stock Net fixed assets 3,000,000 Retained earnings Total equity Total debt and equity Total assets $6,000,000 $6,000,000 If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the the total asset turnover ratio, and the And, according to my understanding of the DuPont equation and its calculation of ROE, the three ratios provide insights into the company's ,effectiveness in using the company's assets, and Now, let's see your notes with your ratios, and then we can talk about possible strategies that will improve the ratios. I'm going to check the box to the side of your calculated value if your calculation is correct and leave it unchecked if your calculation is incorrectStep by Step Solution
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