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I calculated the dupont model for Ford 2001 & GM 2001. I calculated the profit margin,...

I calculated the dupont model for Ford 2001 & GM 2001. I calculated the profit margin, asset turnover, financial leverage and ROE to be as follows. Can someone verify the following to see if I did it correctly:

Profit Margin (PM) = Net income / Sales

PM Ford 2001 = 65,453 / 162,412 = -0.336

PM GM 2001 = 601 / 177,260 = .0033

Asset Turnover (AT) = Sales / Average total assets

AT Ford 2001 = 162,412 / ((276,543 + 284,421) / 2) = 0.579

AT GM 2001 = 177,260 / ((323969 + 303100) / 2) = 0.565

Return on Assets (ROA) = Net Income / Average Total Assets

ROA Ford 2001 = -5,453 / ((276,543 + 284,421) / 2) = -0.194

ROA GM 2001 = 601 / ((323,969 + 303,100) / 2) = .0019

Financial Leverage (FL) = Average Total Assets / Average stockholder's Equity

FL Ford 2001 = ((276,543 + 284,421)/2) / ((7,786 + 18,610)/2) = 21.251

FL GM 2001 = ((323,969 + 303,100)/2) / ((1,970 + 30,175)/2) = 12.571

Return on Equity (ROE) = PM *AT*FL

ROE Ford 2001 = -3.35751% * .579046 * 21.25185 = -41.316%

ROE GM 2001 = 0.33904% * .56536 * 12.57104 = 2.409%

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Answer #1

in dupont Model Return on Equity=profit margin*assset turn over*financial leverage

#for FORD in 2001

profit margin=net income/sales=65,453/162,412=0.403

Asset turn over ratio=sales/average total asset=162,412/ ((276,543 + 284,421) / 2) =0.579

financial liverage= Average Total Assets / Average stockholder's Equity

  ((276,543 + 284,421)/2) / ((7,786 + 18,610)/2)=280,482/13198=21.251

so,ROE=0.403*0.579*21.251=4.96

#for GM in 2001

Profit Margin =(PM) = Net income / Sales= 601 / 177,260 = 0.00339

Asset Turnover (AT) = Sales / Average total asset= 177,260 / ((323969 + 303100) / 2)=0.565

Financial Leverage (FL) = Average Total Assets / Average stockholder's Equity

= ((323,969 + 303,100)/2) / ((1,970 + 30,175)/2) = 313,534.5/16,072.5=19.507

so,ROE=0.00339*0.565*19.507=0.03736

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