(DuPont analysis) Dearborn Supplies has total sales of $ 191 million, assets of $ 90 million, a return on equity of...
(DuPont analysis) Dearborn Supplies has total sales of
$ 191 million, assets of $ 90 million, a return on equity of 31 percent, and a net profit margin of 7.9 percent.
What is the firm's debt ratio?
Homework Answers
| Total asset turnover = Sales/total assets |
| Total asset turnover = 90/191 |
| Total asset turnover = 0.47 |
| DUPONT |
| ROE = Net profit margin*total asset turnover*equity multiplier |
| 0.31=0.079*0.47*Equity multiplier |
Equity multiplier= 8.349
A/E = 8.349
E/A = 1/8.349=0.11977
D/A = 1-E/A =1-0.11977=0.88
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