Explore BrainMass
Share

Calculating ROE Using DuPont Method

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

Using the annual report information available on each of the company's websites: compute the ROE for Yahoo and Google.

Please use the DuPont Method =(Net Profit Margin) x (Asset Turnover) x (Equity Multiplier) for Year End 2010 for each company.

Please show calculations.

© BrainMass Inc. brainmass.com September 21, 2018, 11:38 pm ad1c9bdddf - https://brainmass.com/business/return-on-equity/calculating-roe-using-dupont-method-446699

Solution Preview

We note that

ROE = (Profit margin)*(Asset turnover)*(Equity multiplier) = (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

For Yahoo (figures in thousands)

Net profit = 1,231,663

Sales (aka Revenue) = ...

Solution Summary

Calculating ROE Using DuPont Method

$2.19