TuPont Corporation has net income of $1.95 million, an effective tax rate of 35%, interest expense of $400,000, an asset turnover of 2.0, and $15 million in total assets, of which $7 million is debt. Use the DuPont system to calculate itsROE%, decomposed into itsleverage ratio(aka Equity Multiplier),asset turnover,operating profit margin(EBIT), & tax & interest burden ratios, defining &explaining what each one of these tells you about the health of a company.

Hint:you can check your answers directly using Holden Ch.18. N.B. Holden breaks the Debt Burden Ratio down into two parts - the Interest Burden & the Tax Burden which when multiplied together are the Debt Burden Ratio in a four component DuPont analysis. Read up on Investopedia how the DuPont System works and how to reconcile these different methods which can break the DuPont system into 3, 4 or 5 components!