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Table below provided the ROE and its components for X company and the overall industry: ROE Components of X Company ROE ROE Components of The

Table below provided the ROE and its components for X company and the overall industry:

ROE Components of X Company

ROE

ROE Components of The Overall Industry

ROE

Fiscal Year

Net Profit Margin

Asset Turn Over

Financial Leverage

Net Profit Margin

Asset Turn Over

Financial Leverage

2015

0.103

0.563

2.364

0.137

0.080

1.15

2.528

0.083

2016

0.085

0.571

1.852

0.090

0.077

1.167

2.808

0.073

2017

0.092

0.590

1.736

0.094

0.086

1.178

3.227

0.065

  1. Discuss your findings from the DuPont analysis:
    1. Brainstorm regarding other factors that may drive the 3 components of ROE. In other words, we could further investigate the 3 components of ROE to gain even more detailed insight on the companys performance. No calculations are necessary for this portion of the assignment; simply discuss some general factors that may be driving the 3 components of ROE (i.e., Return on sales, Asset Turnover, Leverage).
      • For example, if return on sales increases, what factors could lead to an increase in return on sales?
    2. What factors are driving your chosen companys ROE? To what extent are these factors driving ROE desirable or undesirable?
    3. How your chosen companys ROE (as well its components) compares to the industry average?

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