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Speaking notes - ( how much of the return on equity is a...

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Speaking notes : For Du Pont Slides Return on Equity – Which measures the rate of return on ownership interest of common shareholders. The dupont model breaks this measure ROE by using these three ratio’s. IBM – Has a higher Net profit Margin. Hp Has the higher volume advantage. If you remember both of these were discussed in our case 10 assignment. Equity multiplier
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Unformatted text preview: ( how much of the return on equity is a result of debt. Is equal to assets divided by shareholder equity. Ibm has lower shareholder equity and more assets, therefore they have a higher equity multiplier, which makes there return on equity higher, due to them having more financial leverage. A larger portion of IBMs return on equity is a result of debt than Hp....
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