ROE ( Return on equity ) using DuPont Identity Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

Question

Want to see the full answer?

Answer 1

Question

Chapter 2, Problem 41P

a)

Summary Introduction

To determine: ROE (Return on equity) using DuPont Identity

Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

b)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the manager wants to increase its ROE by 1%.

Introduction:

Asset turnover ratio indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

c)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%.

Introduction:

Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

XYZ Co. wants to know if its profitability performance has increased from 2009 to 2010. The company had net income of $48,000 in 2009 and $50,000 in 2010. Total assets were $480,000 at the end of 2009, and $560,000 at the end of 2010. Calculate return on assets(ROA) for 2009 and 2010and Comment on the results.

Using the Du Pont method, evaluate the effects of the following relationships for the Butters Corporation. a. Butters Corporation has a profit margin of 5 percent and its return on assets (investment) is 22.5 percent. What is its assets turnover? (Round your answer to 2 decimal places.) b. If the Butters Corporation has a debt-to-total-assets ratio of 55.00 percent, what would the firm's return on equity be? (Input your answer as a percent rounded to 2 decimal places.) c. What would happen to return on equity if the debt-to-total-assets ratio decreased to 50.00 percent? (Input your answer as a percent rounded to 2 decimal places.)

jPhone, Inc., has an equity multiplier of 1.44, total asset turnover of 1.73, and a profit margin of 11 percent. What is the company's ROE?

Answer 2

Question

Chapter 2, Problem 41P

a)

Summary Introduction

To determine: ROE (Return on equity) using DuPont Identity

Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

b)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the manager wants to increase its ROE by 1%.

Introduction:

Asset turnover ratio indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

c)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%.

Introduction:

Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 2, Problem 41P

a)

Summary Introduction

To determine: ROE (Return on equity) using DuPont Identity

Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

b)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the manager wants to increase its ROE by 1%.

Introduction:

Asset turnover ratio indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

c)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%.

Introduction:

Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 2, Problem 41P

a)

Summary Introduction

To determine: ROE (Return on equity) using DuPont Identity

Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

b)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the manager wants to increase its ROE by 1%.

Introduction:

Asset turnover ratio indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

c)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%.

Introduction:

Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 2, Problem 41P

a)

Summary Introduction

To determine: ROE (Return on equity) using DuPont Identity

Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

b)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the manager wants to increase its ROE by 1%.

Introduction:

Asset turnover ratio indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

c)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%.

Introduction:

Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Answer 6

Chapter 2, Problem 41P

a)

Summary Introduction

To determine: ROE (Return on equity) using DuPont Identity

Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

Answer 7

Chapter 2, Problem 41P

a)

Summary Introduction

To determine: ROE (Return on equity) using DuPont Identity

Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

Answer 8

b)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the manager wants to increase its ROE by 1%.

Introduction:

Asset turnover ratio indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Answer 9

b)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the manager wants to increase its ROE by 1%.

Introduction:

Asset turnover ratio indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Answer 10

c)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%.

Introduction:

Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Answer 11

c)

Summary Introduction

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%.

Introduction:

Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 2.1 - Prob. 1CC Ch. 2.1 - Prob. 2CC Ch. 2.2 - Prob. 1CC Ch. 2.2 - Prob. 2CC Ch. 2.2 - Prob. 3CC Ch. 2.3 - What it is the difference between a firms gross...Ch. 2.3 - What is the diluted earnings per share?Ch. 2.4 - Prob. 1CC Ch. 2.4 - Prob. 2CC Ch. 2.5 - Prob. 1CC

ROE ( Return on equity ) using DuPont Identity Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

Solution Summary: The author explains that ROE under DuPont Identity is determined by multiplying the three main elements: net profit margin, asset turnover, and equity multiplier.

Concept explainers

Videos

To determine: ROE (Return on equity) using DuPont Identity

Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%.

Introduction:

Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Want to see the full answer?

Chapter 2 Solutions

ROE ( Return on equity ) using DuPont Identity Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

Solution Summary: The author explains that ROE under DuPont Identity is determined by multiplying the three main elements: net profit margin, asset turnover, and equity multiplier.

Concept explainers

Videos

To determine: ROE (Return on equity) using DuPont Identity Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%. Introduction: Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.

Want to see the full answer?

Chapter 2 Solutions

To determine: ROE (Return on equity) using DuPont Identity

Introduction: ROE under Du Pont Identity is determined by multiplying the three main elements. The three elements under Du Pont Identity are net profit margin, asset turnover and equity multiplier.

To determine: The new asset turnover required to increase its ROE when the net profit margin falls by 1%.

Introduction:

Asset turnover indicates the efficiency of the assets of the company which generates revenue or sales. High ratio of asset turnover is favored than the lower ratio.