Question

The DuPont formula: a)WHAT IS THE FORMULA? (in words) b)What is the fractional expression of the...

The DuPont formula:

a)WHAT IS THE FORMULA? (in words)

b)What is the fractional expression of the formula and

c)Cite a possible strategic implication revealed in the formula.

Homework Answers

Answer #1

a)

The Dupont formula depicts the relationship of return on equity with the profit margin,asset turnover and equity multiplier.

ROE = Profit margin * asset turnover * Equity multiplier

b)

When we expand profit margin,asset turnover and equity multiplier with their respective formulae it becomes the fractional expression

ROE = (net income/sales) * (sales/assets) * (assets/total equity)

c)

The strategic implication here can be analyzed as, the Company can have good ROE and maintain it, and also just like perfect competition industries it can also reduce its competition by reducing the price of its commodity provided its asset turnover is increased with a stable degree of financial leverage.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What does (a + b + c)* mean in regular expression? What kind of words can...
What does (a + b + c)* mean in regular expression? What kind of words can it produce?
Consider the formula used for any confidence interval and the elements included in that formula. What...
Consider the formula used for any confidence interval and the elements included in that formula. What happens to the confidence interval if you (a) increase the confidence level, (b) increase the sample size, or (c) increase the margin of error? Only consider one of these changes at a time. Explain your answer with words and by referencing the formula.
explain, using words, and formula, what the relationship is between displacement and time, velocity and time,...
explain, using words, and formula, what the relationship is between displacement and time, velocity and time, acceleration and time
14. The DuPont equation Corporate decision makers and analysts often use a technique called DuPont analysis...
14. The DuPont equation Corporate decision makers and analysts often use a technique called DuPont analysis to understand and assess the factors that drive a company’s financial performance, as measured by its return on equity (ROE). Depending on the version used, the DuPont equation will deconstruct the firm’s ROE, its best measure of financial performance, into two or three important factors, or drivers. DuPont analysis can be conducted using either the traditional DuPont equation or the extended DuPont equation. The...
What words do the regex expression "d[iy]e" search for? What does the "(?i)p[(oo|ou)]r" filter tell wireshark...
What words do the regex expression "d[iy]e" search for? What does the "(?i)p[(oo|ou)]r" filter tell wireshark to search for?
What does margin measure? Describe this in your own words. Writing a formula is not a...
What does margin measure? Describe this in your own words. Writing a formula is not a sufficient answer. Discuss one specific way a business could increase its margin. question 2) What does turnover measure? As a manager, what is one way you could improve turnover for your division?
A) When is it appropriate to conduct a one sample t-test? B)What is the formula for...
A) When is it appropriate to conduct a one sample t-test? B)What is the formula for a one sample t-test? C)What is the main difference between the formula for a z-test and the formula for a one sample t-test? D)If p > α then what should you do?
10) What is the value of this prefix expression when read as an infix expression? Draw...
10) What is the value of this prefix expression when read as an infix expression? Draw the ordered rooted tree corresponding to the below arithmetic expressions written in prefix notation. a) x,/,9,3,+,x,2,4,-,7,6 b) -,x,2,/,8,4,3 c) 5,2,1,-,-,3,1,4,+,+,x d) 9,3,/,5,+,7,2,-,x
What is the equilibrium expression (Kc) for the following reaction? B(aq) → 2C(aq)
What is the equilibrium expression (Kc) for the following reaction? B(aq) → 2C(aq)
What are the advantages of simple distillation over fractional distillation? Select all that apply. Select one...
What are the advantages of simple distillation over fractional distillation? Select all that apply. Select one or more: a. Less expensive. b. Requires lower pot temperatures. c. Requires less time. d. Gives better separation of methanol and water. e. Requires less energy.