Question

The net income is $100, sales are $200, total assets are $500, and total equity is $400. According to the DuPont system of financial ratio analysis, ROE is about

Select one:

a. 33%

b. 65%

c. 25%

d. 45%

Answer #1

Profit Margin = Net Income / Sales | ||||

= $100/200 | ||||

=50 % | ||||

Assets Turnover Ratio = Sales / average Assets | ||||

= $200/500 | ||||

=0.4 times | ||||

Equity multiplier = total assets / equity | ||||

=500/400 | ||||

=1.25 | ||||

ROE = Profit margin * Asset turnover * equity multiplier | ||||

=50%*0.4*1.25 | ||||

=25% | ||||

Correct Answer =c. 25% |

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2019
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2019
Sales Revenue
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$2,865
Cash
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$50
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$1,500
Short-Term investments
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$9
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Question 1
1a) A company has $1 billion of sales
and $50 million of net income. Its total assets are $500
million, financed half by debt and half by common
equity. What is its profit margin? What is
its ROA?
4
Sales ($M)
Net income ($M)
Total assets ($M)
Debt ratio
Profit margin
Sales ($M)
Net income ($M)
Total assets ($M)
Debt ratio
ROA
1b) A company has a profit margin of
6%, a total asset turnover ratio of 2, and an equity...

Company XYZ
$ millions
Total Assets
1,000
Shareholder Equity
400
Net Income
150
Total Expenses
250
Begin Shareholder Equity Balance
250
Net Payout to Shareholders
50
Share Issuances
0
Stock Repurchases
0
The company’s revenues are:
$200 million
$400 million
$600 million
$800 million
The company’s comprehensive income is:
$200 million
$400 million
$600 million
$800 million
The company’s dividend is:
$0
$50 million
$100 million
$200 million

QUESTION 11
What is return on assets?
It is net income / total equity.
It is sales / total assets.
It is net income / total assets.
It is sales / total equity.
1 points
QUESTION 12
Nvidia has the net profit margin of 32.20% while the industry
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Nvidia underperforms its peers in terms of profitability.
Nvidia outperforms its peers in...

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