Return on Equity
Not what you're looking for?
An analyst applies the Du Pont system of financial analysis to the following data for a company:
Leverage ratio (assets/equity) = 2.2
Total asset turnover = 2.0
Net profit margin = 5.5%
Divident payout ratio = 31.8%
Given that ROE = (Net profits/Pretax profits) x (Pretax profits/EBIT) x (EBIT/Sales) x (Sales/Assets) x (Assets/Equity)
Find the company's return on equity (ROE).
Purchase this Solution
Solution Summary
The solution explains the calculation of ROE using the DuPont equation
Solution Preview
It is given that,
ROE = (Net profits/Pretax profits) x (Pretax profits/EBIT) x (EBIT/Sales) x (Sales/Assets) x (Assets/Equity)
If we take only (Net profits/Pretax profits) x (Pretax profits/EBIT) x ...
Purchase this Solution
Free BrainMass Quizzes
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.