Falsta, Inc., gives you the following information from its last year of performance. REQUIRED: a. Calculate profit
Question:
Falsta, Inc., gives you the following information from its last year of performance.
REQUIRED:
a. Calculate profit margin, asset intensity, and leverage for Falsta, Inc.
b. Calculate the return on equity (ROE) using the three figures you derive in (a).
c. Compare this to a direct calculation of ROE. Are they the same (with rounding errors)?
Falstaff, Inc. Sales $25,000,000 Profit $7000,000 Net assets $22000,000 Equity $5,750,000
Step by Step Answer:
a Profit margin ProfitSales 700000025000000 028 or 28Asset intensity S...View the full answer
Managerial Accounting An Integrative Approach
ISBN: 9780999500491
2nd Edition
Authors: C J Mcnair Connoly, Kenneth Merchant
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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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