Lofty Inns reported these figures for 2013 and 2012 (in millions): Requirements 1. Use DuPont analysis to
Question:
Requirements
1. Use DuPont analysis to compute Loftys return on assets and return on common stockholders equity for 2013.
2. Do these rates of return suggest strength or weakness? Give your reason.
3. What additional information do you need to make the decision in(2)?
2013 2012 Balance sheet Total assets Common stock and additional paid-in capital Retained earnings Other stockholders' equity 27,000 $18,400 389 1,52516,523 3,008)(9,300) 43 Income statement Net sales Operating income Net income S30,500 $28,200 4,0223,819 2,100 1,546
Step by Step Answer:
Req 1 Profit Net income 2100 69 margin Net sales 30500 Asset Net sales 30500 30500 134 ...View the full answer
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom
Related Video
The Dupont analysis is an expanded return on equity formula, calculated by multiplying the net profit margin by the asset turnover by the equity multiplier. The DuPont analysis is also known as the DuPont identity or DuPont model.This Video will guide on how to calculate return on Equity and estimate profitability of shareholders using DuPont Analysis.
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