# Question

Use the following information to answer the questions that follow.

a. Use the DuPont system to compare the two heavy metal companies shown above (HMM and MS) during 2009. Which of the two has a higher return on common equity? What is the cause of the difference between the two?

b. Calculate the return on common equity of the software company, HTS. Why is this value so different from those of the heavy metal companies calculated in part a.?

c. Compare the leverage levels between the industries. Which industry receives a greater contribution from return on total assets? Which industry receives a greater contribution from the financial leverage as measured by the assets-to-equity ratio?

d. Can you make a meaningful DuPont comparison across industries? Why or why not?

a. Use the DuPont system to compare the two heavy metal companies shown above (HMM and MS) during 2009. Which of the two has a higher return on common equity? What is the cause of the difference between the two?

b. Calculate the return on common equity of the software company, HTS. Why is this value so different from those of the heavy metal companies calculated in part a.?

c. Compare the leverage levels between the industries. Which industry receives a greater contribution from return on total assets? Which industry receives a greater contribution from the financial leverage as measured by the assets-to-equity ratio?

d. Can you make a meaningful DuPont comparison across industries? Why or why not?

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