Question

?(DuPont analysis)??Dearborn Supplies has total sales of $ 199 ?million, assets of $ 97 ?million, a...

?(DuPont analysis)??Dearborn Supplies has total sales of $ 199 ?million, assets of $ 97 ?million, a return on equity of 26 ?percent, and a net profit margin of 7.3 percent. What is the? firm's debt? ratio? The? company's debt ratio is nothing?%. ?(Round to one decimal? place.)

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Answer #1

42.4%

Working:

a. Net Income = Sales x Sales Margin = $ 199 Million x 7.3% = $    14.53 Million
b. Equity = Net income/Return on Equity = $    14.53 Million / 26% = $    55.87 Million
c. Debt = Assets - Equity = $ 97 Million - $    55.87 Million = $    41.13 Million
d. Debt Ratio = Debt/Assets = $ 41.13 Million / $          97 Million = 42.4%
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