In this chapter, we discussed the ROE profit driver (or DuPont model). Using that framework, find the

Question:

In this chapter, we discussed the ROE profit driver (or DuPont model). Using that framework, find the missing amount in each case that follows:
Case 1: ROE is 10 percent; net income is $200,000; ratio is 5; and net sales are $1,000,000. What is the amount of average stockholders’ equity?
Case 2: Net income is $1,500,000; net sales are $8,000,000; average stockholders’ equity is
$12,000,000; ROE is 22 percent; and ratio is 8. What is the amount of average total assets?
Case 3: ROE is 15 percent; net profit margin is 10 percent; ratio is 5; and average total assets are $1,000,000. What is the amount of average stockholders’ equity?
Case 4: Net income is $500,000; ROE is 15 percent; ratio is 5; net sales are $1,000,000; and financial leverage is 2. What is the amount of average total assets?

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.