For the following firms, find the return on equity using the three components of the DuPont identity:

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For the following firms, find the return on equity using the three components of the DuPont identity: operating efficiency, as measured by the profit margin (net income/sales); asset management efficiency, as measured by asset turnover (sales/total assets); and financial leverage, as measured by the equity multiplier (total assets/total equity).
Financial Information ($ in millions, 2013) Company Sales Net Income Total Assets Liabilities PepsiCo $6,740 $77,487 $53
Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
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Financial Management Core Concepts

ISBN: 978-0133866698

3rd edition

Authors: Raymond M Brooks

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