The following balance sheet and income statement is for XYZ Pvt. Ltd.

XYZ Pvt. Ltd.

Balance Sheet

For the Period Ended August 31

Cash 2,25,000

Accounts Payable 601,866

Receivables 1,575,000

Notes payable 326,634

Inventories 1,125,000

Other current liabilities 525,000

Total current assets 2,950,000

Total current liabilities 1,435,500

Net fixed assets 1,350,000

Long term debt 1,068,750

Common equity 1,725,750

Total Assets 4,275,000

Total Liabilities

and equity 4,275,000

XYZ Pvt. Ltd.

Income Statement

For the Period Ended August 31

Sales 7,500,000

Cost of goods sold 6,375,000

Selling and General expenses 188,639

Earning before Tax 188,369

Tax payable 75,438

Net Income 113,022

What is Dupont analysis and construct the extended Dupont equation for X limited to determine

its ROE.

Required:

1. Explain Dupont Analysis

2. Construct the extended Dupont equation for XYZ Pvt. Ltd.

3. Determine the company's ROE.

4. Explain the financial performance of these two companies based on the analysis above

and conclude with which company would you rather invest in or work for and why.