Purchase Solution

Using the extended DuPont equation to provide a summary

Not what you're looking for?

Ask Custom Question

Dear Sir/Madame,

I would like to request assistance analyzing the financials of Ford Motor Company.

I need to have the results in excel so I may compare them to my answers.

The three questions are as follows:
1) Using the extended DuPont equation to provide a summary and overview of Ford's Financial Condition. (From Profit Margin, Total Asset Turnover, and Equity Multiplier)
2) Calculate the cost of each capital component, after-tax cost of debt, cost of preferred, and cost of equity with the DCF method and CAPM Method.
3) Estimate the Company's WACC.

** See ATTACHED file(s) for complete details **

Attachments
Purchase this Solution
Solution Summary

The expert uses the extended DuPont equation to provide a summary.

Solution Preview

ANSWERS
Please see attached file for answers.

==============================================

The DuPont equation can be broken down into its three components:
1. Profit margin = Net Income / Total Sales
2. Return on assets = Net Income / Total Sales
3. Multiplier = Total Assets / Total Stockholders' Equity
Thus, the DuPont formula is net income divided by total stockholders' equity or simply, the return on stockholders' equity

For Ford, Inc. and for the year ended December 31, 2008, the components of its return on stockholders' equity are:
1. Profit margin = -10.03%
2. Return on assets = -6.72%
3. Multiplier = -12.61 times
Hence, the DuPont ...

Purchase this Solution
Free BrainMass Quizzes
Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

View More Free Quizzes
Related BrainMass Solutions

  • DuPont Equation: Expense control, asset management, and financial leverage

    A company in a high leverage industry that uses financial leverage to provide appropriate returns to shareholders (The information was obtained at http://www.money-zine.com/investing/investing/dupont-equation/ "The DuPont Equation").

  • Du Pont analysis

    the above equation: The three financial ratios that are linked : 1.

  • Finance Calculation : DuPont (Du Pont) Analysis

    Construct an extended Du Pont equation for Fern, and compare the company's ratios to the industry average ratios. c. Do the balance sheet accounts or the income statement figures seem to be primarily responsible for the low profits?

  • Evaluate financial statement and apply Dupont equation

    138951 Evaluate Financial Statement and Apply Dupont Equation Please help me to evaluate the financial statement of any publicly traded company and apply the Dupont equation appropriately. See the attached file.

  • The 3-Stage Dupont Formula

    This solution illustrates how to calculate a company's return on equity using the 3-stage DuPont formula an discusses some qualitative factors to consider when analyzing a company's financial performance using the DuPont Formula.

  • Accrual Accounting and Financial Statements

    DEBIT: Insurance Expense $x,xxx CREDIT: Prepaid Insurance $x,xxx The solution provides a classified balance sheet explanation and describes its purposes. The DuPont equation is related to return on equity and adjusting entries are identified.

  • Financial Accounting: Pacific Capital Bank

    - Explain how the DuPont formula is used as a measurement of asset performance in banks. Then answer the following questions: - Do the Return on Equity model and the DuPont formula provide a good measurement asset performance?

  • Return on investment

    DuPont Equation) Return on Investment = Net Income/Sales x Sales/Assets = ROS X Asset turnover The solution explains how to calculate the return on investment using the Dupont Equation.

  • Dupont Model and Return on Equity

    571065 Dupont Model and Return on Equity Compute the ROE for 2013 and 2014 using the DuPont model based on Brown's 2014 annual report information below.

View More Related Solutions