Homework #1B (DuPont analysis, Return on Investment
Ratios)
Question 1
ROE (Return on Equity)
ROE = (Net Profit Margin) x (Total Asset Turnover) x (Equity Multiplier)
Vintage, Inc. has a total asset turnover of 0.94 and a net profit margin of 4.52 percent. The total
assets to equity ratio for the firm is 3.1. Calculate Vintage’s return on equity.
Round the answers to two decimal places in percentage form. (Write the percentage sign in the
"units" box).
Answer:
13.17%
Question 2
Basic Earning Power Ratio = EBIT / Total Assets
Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, calculate the firm's Basic Earning Power ratio.
Round the answers to two decimal places in percentage form. (Write the percentage sign in the
"units" box).
Balance Sheet December 31, 2013
Cash and marketable securities $112,000 Accounts payable
$211,000
Accounts receivable $325,000 Notes payable
$51,500
Inventories $426,000 Accrued expenses
$50,100
Prepaid expenses $10,700 Total current liabilities
$312,600
Total current assets $873,700 Long-term debt
$225,000
Gross fixed assets $1,514,000 Par value and paid-in-capital
$117,000
Less: accumulated depreciation $315,000 Retained Earnings
$1,418,100
Net fixed assets $1,199,000 Common Equity
1,535,100
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https://www.coursehero.com/file/16441541/FINC-330-Homework-1B-DuPont-analysis-Return-on-Investment-Ratios/
Ratios)
Question 1
ROE (Return on Equity)
ROE = (Net Profit Margin) x (Total Asset Turnover) x (Equity Multiplier)
Vintage, Inc. has a total asset turnover of 0.94 and a net profit margin of 4.52 percent. The total
assets to equity ratio for the firm is 3.1. Calculate Vintage’s return on equity.
Round the answers to two decimal places in percentage form. (Write the percentage sign in the
"units" box).
Answer:
13.17%
Question 2
Basic Earning Power Ratio = EBIT / Total Assets
Canadian Bacon Inc. financial statements are presented in the table below.
Based on the information in the table, calculate the firm's Basic Earning Power ratio.
Round the answers to two decimal places in percentage form. (Write the percentage sign in the
"units" box).
Balance Sheet December 31, 2013
Cash and marketable securities $112,000 Accounts payable
$211,000
Accounts receivable $325,000 Notes payable
$51,500
Inventories $426,000 Accrued expenses
$50,100
Prepaid expenses $10,700 Total current liabilities
$312,600
Total current assets $873,700 Long-term debt
$225,000
Gross fixed assets $1,514,000 Par value and paid-in-capital
$117,000
Less: accumulated depreciation $315,000 Retained Earnings
$1,418,100
Net fixed assets $1,199,000 Common Equity
1,535,100
This study source was downloaded by 100000872281541 from CourseHero.com on 09-23-2023 14:19:58 GMT -05:00
https://www.coursehero.com/file/16441541/FINC-330-Homework-1B-DuPont-analysis-Return-on-Investment-Ratios/
