This exercise is based on the Peabody Toys, Inc., data from E 4-27.

Required:
1. Determine the following components of the DuPont framework for 2018:
a. Profit margin on sales
b. Asset turnover
c. Equity multiplier
d. Return on shareholders' equity
2. Write an equation that relates these components in calculating ROE. Use the Peabody Toys data to show that the equation is correct.

Transcribed Image Text:

($ in thousands) 2018 2017 Income statement Information Net sales Net income Balance sheet Information Current assets Property, plant, and equipment (net) $5,200 1880 $4,200 124 Total assets Current liabilities Long-term liabilities Paid-in capital Retained earnings $800 1,100 $1,900 $ 600 750 400 150 $1,900 $ 750 950 $1,700 $ 450 750 400 100 $1,700 Liabilities and shareholders' equity