, MINDTAP ignment 04- Analysis of Financial Statements ue Today at 11 PM EDT You
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Question
, MINDTAP ignment 04- Analysis of Financial Statements ue Today at 11 PM EDT You Give me a minute to look at these financial statements and to remember what I know about the DuPont analysis. Balance Sheet Data Income Statement Data Cash $1,300,000 Accounts payable $1,560,000 Sales $26,000,000 520,000 Cost of goods sold 13,000,000 2,600,000 Accruals 3,900,000 Notes payable 7,800,000 2,080,000 Gross profit 4,160,000 Operating expenses 2,990,000 EBIT 7,150,000 Interest expense 1,462,500 EBT Inventory 13,000,000 6,500,000 6,500,000 608,400 5,891,600 2,062,060 $3,829,540 Current assets Current liabilities Long-term debt Total liabilities Common stock 5,200,000 Retained earnings 5,850,000 Net income Total assets $13,000,000 Total debt and equity $13,000,000 If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the , the total asset turnover ratio, and the And, according to my understanding of the DuPont equation and its calculation of ROE, the three ratios provide insights into the company's effectiveness in using the company's assets, andExplanation / Answer
Answer:
If i remember correctly, the DUpont equation breaks down our ROE into three component ratios: the Net Profit Margin, the Total Assets Turnover Ratio, and the Equity Multiplier.
ROE = Net profit margin × Asset Turnover × Equity Multiplier
And, according to my undertstanding of the Dupont equation and its calculation of ROE, the three ratios provides insights into the Company’s Use of debt over assets, effectiveness in using the Company’s assets, and Profit Margin.
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