Answered step by step
Verified Expert Solution
Question
1 Approved Answer
If we know that a firm has a net profit margin of 4.3%, total asset turnover of 0.79, and a financial leverage multiplier of 1.45,
If we know that a firm has a net profit margin of 4.3%, total asset turnover of 0.79, and a financial leverage multiplier of 1.45, what is its ROE? What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity? The firm's ROE is %. (Round to two decimal places.) What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity? (Select from the drop-down menus.) has Observe the modified DuPont formula (see ) and notice that each component can be compared with industry standards to assess the firm's performance. Therefore, the advantage of using the Dupont system is that ROE is broken into three distinct components. Starting at the right we see how increased assets over the owners' original equity. Next, moving to the left, we see how efficiently the firm used its to generate sales. Finally, the V shows the measure of profitability on sales
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started