Explore BrainMass
Share

Calculating ROE Using DuPont Method

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 July 19, 2018, 2:12 am ad1c9bdddf

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