Computing and Disaggregating Return on Equity

$ millions Current Fiscal Year Prior Fiscal Year

Income statement information:

Sales $$19,643$ $$20,244$

Net income $9111,615$

Balance sheet information:

Total assets $14,29014,044$

Total stockholders' equity $7,2907,576$

Following is selected income statement and balance sheet information from a recent Form $10-$K for Ralph Lauren Corporation.

Answer the following questions.

$$Note: Round to the nearest whole dolllar

a$.$ Calculate return on equity for the current fiscal year.

Ratio Numerator Denominator Result

Return on equity Answer $1$

$0$

$-$: Answer $2$

$0$

$=$

b$.$ Disaggregate return on equity to its DuPont components of activity $($profit margin$),$ activity $($asset turnover$),$ and leverage $($financial leverage$).$ Demonstrate how the product of the components is equal to return on equity.

Ratio Numerator Denominator Result

Profit margin Answer $3$

$0$

$-$: Answer $4$

$0$

$=$

Asset turnover Answer $5$

$0$

$-$: Answer $6$

$0$

$=$

Financial leverage Answer $7$

$0$

$-$: Answer $8$

$0$

$=$

Return on equity

X

X

$=$