DUPONT ANALYSIS Henderson's Hardware has an ROA of 15%, a 3% profit margin, and an ROE...

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Question

DUPONT ANALYSIS Hendersons Hardware has an ROA of 15%, a 3% profit margin, and an ROE of 22%. What is its total assets turno

Answer 1

Answer #1

ROA=Net income/Total assets

Net income=0.15*Total assets

Profit margin=Net income/Sales

Net income=0.03*Sales

ROE=Net income/equity

Net income=0.22*Equity

a.Total asset turnover=Sales/Total assets

=(Net income/0.03)/(Net income/0.15)

=5

b.Equity multiplier=Total assets/equity

=(Net income/0.15)/(Net income/0.22)

=1.47(Approx).

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Answer 2

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