Question
The DuPont formula relates return on equity (= Net incomet Stockholders equityt) to the company's net profit margin (= Net income Sales), asset turnover (=
The DuPont formula relates return on equity (= Net incomet Stockholders equityt) to the company's net profit margin (= Net income Sales), asset turnover (= Salest Total assetst), and equity multiplier (= Total assets Stockholders equity). This Company is in an industry where the average net profit margin is 10.65%, the debt-to-asset ratio (= Debt Total assets) is 23.75%, and return on equity is 30.06%. Find below the Companys financial statements for year 2525. (find all the Dupont ratios of the industry and firm then compare)
Balance Sheet, 12/31/2525 Income, 1/1 12/31/2525 CA $6,644 Debt $5,847 Sales $31,111 PP&E $7,851 SE $8,648 total costs $27,867 TA $14,495 $14,495 NI $3,244 For the company relative to the industry, select the one statement most consistent with the DuPont analysis.
the companys profit margin indicates its revenues are unusually small relative to its costs
the companys asset turnover indicates sales are unusually small relative to its assets
the companys equity multiplier indicates the firm has an unusually small debt burden
the companys asset turnover indicates sales are unusually small relative to its assets
the companys equity multiplier indicates the firm has an unusually large debt burden
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started