Question

Prepare the DuPont model to identify which company has a lower return on equity. Thenbriefly explain exactly why return on equity is lower. Make sure you show all your caculations and support your answers with appropriate analytics.

The numbers below are for Misty Mountain and Fanghorn Forest: Misty Mountain Fanghorn Forest 1,500 S 1,600 Cash Accounts receivable Inventory Property, plant and equipment Total assets 6,000 6,600 7,000 12,000 14,000 18,600 46,200 21,100 S Total liabilities Total equity 5,500 19,300 15,400 7,033 Sales Cost of goods sold Wage expense Other expenses Net income 21,000 55,000 44,000 6,300 1,500 3,200 16,800 2,400 1,000 800 $

Answer 1