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Many retailers have struggled during the pandemic due to decreased foot traffic at brick and mortar locations, as well as significant decreases in demand for
Many retailers have struggled during the pandemic due to decreased foot traffic at brick and mortar locations, as well as significant decreases in demand for goods due to the economic downturn. However, some retailers are actually seeing spikes in sales driven by the pandemic. (To find out more, you can follow this embedded link.) To help us understand firm performance prior to pandecorating, we will examine the 2019 financials of a firm that was impacted by the increase in demand for paint and other items involved in interior decorating projects: Sherman-Williams (ticker: SHW). Go to Yahoo Finance and search the supplied ticker. Navigate to the Financials tab and select Annual data. All financial information should be as of 12/31/2019. Questions: 1. Following the Dupont System of Analysis, calculate the ROA and ROE of SHW in 2019 (as well as all the component ratios). 2. As a comparison, SHW's industry competitors had a Net Profit Margin of 3.30%, a ROA of 3.20%, and a ROE of 2.40%. Calculate the component ratios of the Dupont System of Analysis. What are the primary contributors to the differences in ROA and ROE between SHW and the overall industry? 3. How do you expect the 2020 values to differ from SHW's past 2019 performance? Which components of the Dupont System of Analysis would most likely differ and why? 4. Why would it be difficult to draw indications of future performance from the 2020 values
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