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    Comparative Analysis: Common size and Dupont Formula

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    Complete a DuPont analysis for CostCo and Kroger for 2012, showing ROE, ROA, the profit margin, total asset turnover and equity multiplier. Discuss the differences between the two corporations.

    Compute a common-size analysis in Excel and discuss the differences between the two corporations.

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    Solution Preview

    CostCo and Kroger.

    See computations and financial statistics in Excel, attached.

    Part I

    Kroger beats CostCo in terms of gross margin, the ability to price products above cost. Kroger's 20.56% is almost double CostCo's 12.42%. However, in the other profitability measures, CostCo is very close to Kroger's results. For instance, the net profit margin of 1.55% and 1.72% are very comparable and so are the return on assets of 6.07% and 6.30%, with CostCo edging ...

    Solution Summary

    Your tutorial is 280 words and includes a spreadsheet analysis of DuPont formula and a vertical analysis of the income statement for 2012 for both CostCo and Kroger.