13. Problem 4.03 (DUPONT Analysis) eBook Henderson's Hardware has an ROA of 15%, a 6.5% profit margin, and an ROE o...

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business finance

Answer 1

Answer #1

ROA=Net income/Total assets

Net income=0.15*Total assets

Profit margin=Net income/Sales

Net income=0.065*Sales

ROE=Net income/equity

Net income=0.17*Equity

a.Total asset turnover=Sales/Total assets

=(Net income/0.065)/(Net income/0.15)

=2.31(Approx).

b.Equity multiplier=Total assets/Equity

=(Net income/0.15)/(Net income/0.17)

=1.13(Approx).

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Answer 2

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