please use Dopont formula net income/total equity= netincome/total revenue + tot
ID: 377599 • Letter: P
Question
please use Dopont formula
net income/total equity= netincome/total revenue + total revenue/total assets+ total assets/total equity
10. Using the following financial statement data on The Old Professor Publishing Company, perform a DuPont Analysis. (15 points) The Old Professor Publishing Company Statement of Operations Year Ending December 31, 2015 (in thousands) Revenue: Original Publications Duplicate Prints Citations/Royalties $27.500 5,000 2,500 535.000 Total Revenue Expenses Salaries rinting Materials Machine Maintenance S10,000 3,000 500 $14,500 Total Expenses 20,500 $700 $21,200 Net Income Net Assets (beginning yr. Net Assets/Equity (end The Oid Professor Publishing Company Balance Sheet Year Ending December 31, 2015 (in thousands) Assets. $10,000 9.000 400 $19.400 Cash Printed Copies (Extras) lics Total Current Assets Net Property and Equipment Total Assets $7.750 s27.150 Liabilities and Net Assets: Accounts Payable $2.000 8003 Accrued Espenses Current Debt Portion Total Gai Total Gurrent Liabilities 950 Long-term Deb Total Liabilities ,000 Ss,950 S21:200 527150 Net Assets Equity fend yr) Total Liabilities and Net AssetsExplanation / Answer
Now as per dupont formula we analyze
the return on equity (ROE) for any firm as
=Net income/Total equity
=(Net income/ Revenue)*(Revenue/Total Assets)*(total assets/total equity)
= (20,500/35,000)*(35,000/27,150)*(27,150/21,200)
= 96.69%
Dupont also proposed the formual for RoA (Rturn on Assets) as
=Net Income/Total assets
=(Net income/revenue)*(revenue/assets)
= 20,500/27,150
=75.50%
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