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Pete Sandstrom is the CEO of WeRHere4U Ltd. He is speaking with you having shown you these financial statements for the years 2016 through
Pete Sandstrom is the CEO of WeRHere4U Ltd. He is speaking with you having shown you these financial statements for the years 2016 through 2019. He is extremely proud of his results; Net profit has steadily increased from $67,200 in 2017 to $73,500 in 2018 and in 2019, $83,300. He also highlights to you that the Return on Equity (ROE) at WeRHere4U Ltd has also improved substantially form 51% in 2017 to 62% in 2019. He is hoping that when these results are presented to the shareholders of WeRHere4U that he will be rewarded with a substantial bonus for all his good efforts. You decide to take a closer look at the performance of WeRHere4U using the techniques you have learnt in ACCT1101 by considering each of the questions below. You now use the information provided in the WeRHere4U's financial statements to perform the following DuPont Analysis of the Return on Equity (ROE) for each of the years 2017, 2018 and 2019. DU PONT ANALYSIS 2019 Return on Equity (ROE) Return on Capital Employed (ROCE) Operating Profit Margin Capital Turnover Tax and Interest ratio Leverage 2018 0.6170 0.5444 0.5913 0.6000 0.3676 0.3677 1.6087 1.6316 0.6125 0.6447 1.7037 1.4074 2017 0.5110 0.6390 0.3704 1.7252 0.6720 1.1901 Required: (a) Explain the meaning and interpretation of EACH of these ratios. [Maximum 60 words EACH]
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