DuPontAnalysisSimPPTVO

DuPontAnalysisSimPPTVO - DuPont Analysis Professor Susan...

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DuPont Analysis Professor Susan White
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ROE = Return on Equity Net Profitability x Asset Efficiency x Leverage ROE = Net Profit Margin x Total Asset Turnover x Equity Multiplier ROE = Net Income Shareholders Equity Net income  /Sales Sales/ Assets Assets/ Equity Net Income Equity
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A E = 1 + D E Return on Equity ROE = Sales Net Income x Assets Sales x Equity Assets ROE = Net Income Sales Sales Assets Assets Equity x x 0.249 0.75 1.97 = =0.368
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Return on Equity ROE = Net Income Sales Sales Assets Assets Equity x x ROE = 0.249 x 0.75 x 1.97 = 0.368 0.34 2.48 2.50 = =0.211
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Return on Equity ROE = 0.249 x 0.75 x 1.97 = 0.368 ROE = 0.34 x 2.48 x 2.50 = 0.211 ROE = Net Income Sales Sales Assets Assets Equity x x 0.12 0.629 2.58 = =0.20
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Why does a software company have a relatively low asset  turnover? On Microsoft’s Balance Sheet: $31.5 billion in cash Assets Cash = 0.404 Generates little revenue Investors put pressure on Microsoft Announced 8 cents in 2002
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DuPontAnalysisSimPPTVO - DuPont Analysis Professor Susan...

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