Question: All answers are wrong except Financial Leverage 5.12 is correct, please help. WRONG are: a) ROE 90%, a) ROA 18%, b) Profit margin 8%, and
All answers are wrong except Financial Leverage 5.12 is correct, please help. WRONG are: a) ROE 90%, a) ROA 18%, b) Profit margin 8%, and b) asset turnover 214 are all wrong answers. ONLY correct answer was a) Financial Leverage 5.12
Apply DuPont Disaggregation of ROE Selected balance sheet and income statement information for Home Depot follows.
| $ millions | Jan. 31, 2016 | Feb. 01, 2015 |
|---|---|---|
| Operating assets | $40,683 | $38,573 |
| Nonoperating assets | 2,266 | 1,773 |
| Total assets | 42,949 | 40,346 |
| Operating liabilities | 15,043 | 13,552 |
| Nonoperating liabilities | 21,275 | 17,157 |
| Total liabilities | 36,318 | 30,709 |
| Total stockholders' equity | 6,631 | 9,637 |
| Sales | 89,234 | |
| Net operating profit before tax (NOPBT) | 12,124 | |
| Nonoperting expense before tax | 803 | |
| Tax expense | 4,001 | |
| Net income | 7,320 |
Round answers to two decimal places (ex: 0.12345 = 12.35%)
a. Compute ROE and disaggregate the ratio into its DuPont components of ROA and financial leverage. ROE: Answer
% ROA: Answer
% Financial leverage: Answer
b. Disaggregate ROA in to profitability and productivity components. Profit margin Answer
% Asset turnover Answer
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