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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 |
- Discuss your findings from the DuPont analysis:
- 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?
- What factors are driving your chosen companys ROE? To what extent are these factors driving ROE desirable or undesirable?
- How your chosen companys ROE (as well its components) compares to the industry average?
- 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).
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