Question

The E. I. Dupont de Nemours has net income of $158,230. Receivables Turnover is 12.83 Times. Total Assets are $804,320, Total Accounts Receivable are $155,218 and Total Liabilities are $160,864. Using the DuPont Model, determine E. I. Dupont de Nemours Profit Margin, Total Asset Turnover and ROE?

Provide answer in excel with formula please

Answer 1

Receivables turnover = Credit sales/receivables

12.83 = Credit sales/155218

Credit sales = 1991446.94

Profit margin% = Net income/sales

Profit margin% = 158230/1991446.94

Profit margin% = 7.95

Total asset turnover = Sales/total assets

Total asset turnover = 1991446.94/804320

Total asset turnover = 2.48

D/A = debt/assets = 160864/804320 = 0.2

D/A =0.2

E/A=1-D/A=1-0.2=0.8

Equity multiplier=1/(E/A)=1/0.8=1.25

DUPONT

ROE = Net profit margin*total asset turnover*equity multiplier

ROE%=0.0795*2.48*1.25

ROE% = 24.65