Modified Du Pont System

Integrated Analysis of a Companys Profitability

LAURA Incorporation (LAR) is a well-established and reasonably successful company in the rather-competitive apparel business, focusing on streetwears. In spite of its outstanding position in its industry (e.g.with the highest number of followers on Instagram and Facebook in comparison to other streetwears merchants/houses), LAR managers wish to assess the firms strengths and/or weaknesses for managerial purposes. Details of LAR and its industry are given as follows:

	LAR	Industry
EPS	$ 9.5	$ 5.5
ROE	N/A	12%
Profit Margin	N/A	4%
Total asset turnover	N/A	1
Equity multiplier	N/A	3
Stock price	$ 77	-
# of shares outstanding (shrs) 1,000,000	-	-
Equity book value per share $40	-	-
Sales	$ 70,000,000	-
Total Asset	$ 100,000,000	-

(Note: N/A stands for not available and that you need to calculate it.)

Questions:

1) Identify whether investors would be happy with LAR performance based on Modified DuPont System. Identify the firms strengths and weaknesses.

2) Provide a suggestion/note to LAR management on how the firm should improve or maintain various aspects of their corporate finance (based on Modified DuPont System) through a 3-page executive summary document. Be insightful and clear as much as possible.