In the DuPont system, there are two components of ROA. Determine whether efficiency or productivity (or both)
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Finns' Fridges is a company created by twin brothers David and Douglas Finn, who rented small refrigerators to other students in their college dormitory. Use the following statements to answer the questions about Finns' Fridges.
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Balance Sheet for Finns' Fridges (End of the year indicated) Year 1 ($) Year 2 (S) Assets Cash Property and equipment (net) Total assets Liabilities and Owners' Equity Interest payable Tax payable Dividends payable Long-term debt Total liabilities Common shares Retained earnings Total owners' equity Total liabilities and owners' equity 1,150 3,840 4,990 493 3,888 4,381 160 182 210 2,400 2,952 1,000 429 1,429 4,381 200 200 3,200 3,777 1,000 213 1,213 4,990 Income Statement for Finns' Fridges (For the full year indicated) Year 1 (S) Year 2 ($) 2,200 220 Revenues (net of bad debts) Selling and administrative expenses Loss (stolen equipment) EBITDA Amortization expense EBIT Interest expense Earnings before tax Tax (30%) Net income Earnings per share (100 shares) Dividends per share 1,950 0 160 1,790 1,000 790 200 590 0 1,980 1,212 768 160 608 182 426 4.26 2.10 413 4.13 2.00
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Year 1 Year 2 Efficiency Ratio NI Sales 413 1950 212 426 2200 1...View the full answer
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Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
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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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