Question: Question 1: An analyst has gathered data from two companies in the same industry. Company A Company B Revenues 500 900 EBIT 35 100 Interest

Question 1: An analyst has gathered data from two companies in the same industry. Company A Company B Revenues 500 900 EBIT 35 100 Interest expense 5 0 EBT 30 100 Taxes 10 40 Net Income 20 60 Total assets 250 300 Total debt 100 50 Owners' equity $150 250 You are required: 1. Calculate the five components of DuPont analysis for both companies (30 marks) 2. Calculate the ROE for both companies (5 marks) 3. Explain the critical factors that account for the differences in the two companies ROES. (15 marks) Total 50 marks

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