Question: Question 3 An analyst has gathered data from two companies in the same industry. Company A Company B E Revenues 600 950 I EBIT 45

Question 3 An analyst has gathered data from two companies in the same industry. Company A Company B E Revenues 600 950 I EBIT 45 150 Interest expense 10 0 EBT 35 150 Taxes 5 30 Net Income 30 120 Total assets 300 400 Total debt 100 100 Owners' equity 200 300 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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