   Chapter 15, Problem 15.4MBA

Chapter
Section
Textbook Problem

Financial leverageUsing the answers to MBA 15-2 and MBA 15-3, compare and comment on the forSouthwest Airlines (LUV)For Delta Air Lines (DAL).

To determine

Concept Introduction:

DuPont analysis is an Analysis to examine the Return of Equity (ROE) of a company by various means which includes Profit margin, Asset turnover and financial leverage.

To Compare:

The performance of both companies

Explanation

Statement showing calculation of Profit Margin, Investment Turnover and Return on Investment:

 Operating Income (A) \$ 2,181 Sales (B) \$ 19,820 Profit Margin (C) = A/B = 11.00% Sales (D) \$ 19,820 Average Total Assets (E) \$ 20,518 Investment Turnover Ratio (F)= (D/E) = 0.97 Return on Investment (ROI) = (C*F) = 10...

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