The numbers for Faulty Company and Benchmark Company for the year 2012 are as follows: 1. Compute
Question:
1. Compute return on equity, return on sales, asset turnover, and the assets-to-equity ratio for both Faulty and Benchmark.
2. Briefly explain why Faultys return on equity is lower thanBenchmarks.
Transcribed Image Text:
Faulty Benchmark $ 500 2,740 6,100 6,300 11,730 3,910 45,000 32,100 4,200 7,760 $ 140 Cash Accounts receivable 900 2,200 1,800 3,780 1,260 12,000 7,650 1,300 2,940 Inventory Property, plant, and equipment. Total liabilities Stockholders' equity Sales Cost of goods sold Wage expense Other expenses. Net income 110 940
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1 Faulty Benchmark Cash 140 500 Accounts receivable 900 2740 Inventory 2200 6100 Property plant an...View the full answer
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Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
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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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