Question

During the year, Shields Corp. generated net income of $123,547 on sales of $1,540,005. At the end of the year, Shields had total assets of $920,558 and total equity of $403,346.
Required
a. Conduct a DuPont analysis to identify Shields' return on equity and the return's three components.
b. Shields is considering plans that would either
(1) Double its operating efficiency
(2) Increase its capital structure by half of its current value.
Which plan would provide the greatest increase to return on equity?


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  • CreatedJuly 16, 2015
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