Question
Imagine that you are the Director of HR for a company in the technology industry. The industry is rapidly changing and very fast-paced. Unfortunately, your
Imagine that you are the Director of HR for a company in the technology industry. The industry is rapidly changing and very fast-paced. Unfortunately, your company has not been performing well compared to competitors. The DuPont model of calculating the Return of Assets and the Return on Equity is a powerful tool for analysis. Use the data from the table below:
Year NPM TAT FLM ROA ROE
2010 .074 1.8 1.75 13.32% 23.31%
2011 .071 1 .93 1.9 13.70% 26.04%
2012 .055 2.03 2.04 11.17% 22.78%
NPM=Net Profit Margin
TAT=Total Asset Turnover
FLM=Financial Leverage Multiplier
ROA=Return on Total Assets
ROE=Return on Equity
- Define the potential areas of financial strength and weakness
- After you determine these financial strengths and weaknesses, what strategies should the company implement to improve the situation?
- How can HR contribute to this effort or be actively involved in the process?
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