This exercise is based on the Peabody Toys, Inc., data from E 4-27. Required: 1. Determine the
Question:
This exercise is based on the Peabody Toys, Inc., data from E 4-27.
Required:
1. Determine the following components of the DuPont framework for 2018:
a. Profit margin on sales
b. Asset turnover
c. Equity multiplier
d. Return on shareholders' equity
2. Write an equation that relates these components in calculating ROE. Use the Peabody Toys data to show that the equation is correct.
($ in thousands) 2018 2017 Income statement Information Net sales Net income Balance sheet Information Current assets Property, plant, and equipment (net) $5,200 1880 $4,200 124 Total assets Current liabilities Long-term liabilities Paid-in capital Retained earnings $800 1,100 $1,900 $ 600 750 400 150 $1,900 $ 750 950 $1,700 $ 450 750 400 100 $1,700 Liabilities and shareholders' equity
Step by Step Answer:
Requirement 1 a Profit margin on sales 180 5200 346 b Asset turnover 5...View the full answer
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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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