Lexington Inns reported these figures for 2014 and 2013 (in millions): Requirements 1. Use DuPont analysis to
Question:
Requirements
1. Use DuPont analysis to compute Lexington's return on assets and return on equity for 2014.
2. Do these rates of return suggest strength or weakness? Give your reason.
3. What additional information do you need to make the decision in requirement 2?
2014 2013 Balance sheet Total assets Common share capital Retained earnings Other shareholders' equity $15,702 80 11,519 (3,005) $13,728 680 16,499 9,095) Income statement Net sales Operating income Net income $25,500 4,025 1,500 $27,500 3,813 1,550
Step by Step Answer:
Req 1 Profit Net income 1500 59 margin Net sales 25500 Asset Net sales 25500 25500 17...View the full answer
Financial Accounting
ISBN: 978-0133472264
5th Canadian edition
Authors: Charles Horngren, William Thomas, Walter Harrison, Greg Berberich, Catherine Seguin
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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