DuPont Analysis breaks out ROE into 3 sub-components: Profit Margin‚ Total Asset Turnover and Equity Multiplier. Maximizing some/all of these subcomponents would result in a better ROE. The ‘Profit Margin’ ratio is a measure of operational efficiency of a firm. Ideal value for this ratio is 100%‚ which can be achieved if Sales are equal to Net Income. However‚ in the business that Whole Foods is in‚ this ratio will not be anywhere near 100%. One place Whole Foods can increase ‘Profit margin’
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at atmospheric pressure and a temperature of 50 °C. The oxide is thus reduced to impure nickel. Reaction of this impure material with residual carbon monoxide gives the toxic and volatile compound‚ nickel tetracarbonyl‚ Ni(CO)4. This compound decomposes on heating to about 230 °C to give pure nickel metal and CO‚ which can then be recycled. The figure shows the various steps of reaction in Mond’s process after reducing Nickel oxide to impure Nickel. The impure nickel is reacted with excess
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Evaluating Financial Performance Finance Financial Performance • One of the most fundamental facts about businesses is that the operating performance of the firm shapes its financial structure. • It is also true that the financial situation of the firm can also determine its operating performance. • The financial statements are therefore important diagnostic tools for the informed manager. – To keep the discussion grounded‚ we will use the 1997-98 financial statement for the Timberland Company
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Chem - Med Company Case # 02: Question # 1: Rate of Sales growth for the year 2006 is 25% where as the sales growth projected for the year 2007‚ 2008 and 2009 is 40%. Question # 02: Income growth in the year 2006 was 50.13%. The forecasted income growth in 2007 is 39.91%‚ 2008 is 20.76% and 2009 is 49.41%. The income
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Gross Profit Margin (USD $ in Millions) Source: Coca-Cola Co. Annual Reports Gross profit margin(2013) = 100 × 28‚433/46‚854 = 60.68% Gross profit margin(2012) = 100 x 28‚964/ 48‚017=60.32% Gross profit margin(2011) = 100 x 28‚326 = 60.86% Source: PepsiCo Inc. Annual Reports Gross profit margin (2013) = 100 x 35‚172/66‚415 = 52.96% Gross profit margin (2012) = 100 x 34‚201/65‚492 = 52.22% Gross profit margin (2011) = 100 x 34‚911/66‚504 = 52.49% Gross profit margin is a resource
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Retained earnings = $95‚000 – 42‚000 Retained earnings = $53‚000 So‚ the equity at the end of the year was: Ending equity = $230‚000 + 53‚000 Ending equity = $283‚000 The ROE based on the end of period equity is: ROE = $95‚000 / $283‚000 ROE = .3357 or 33.57% The plowback ratio is: Plowback ratio = Addition to retained earnings/NI Plowback ratio = $53‚000 / $95‚000 Plowback ratio = .5579 or 55.79% Using the equation
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Ratio Analysis 5. Liquidity (Cashflow/BS) 6. How is Disney doing compare to competitors ? 7. ROE and ROA (IS/BS) 8. Future Prospects 9. Pricing Strategy 10. Marketing Strategy I. Return on Investment Return on Equity (ROE): 2012 ROE=Net Income/Average Stockholders’ Equity ROE=6173/(41958+39453):2 ROE=0‚1516 Disney’s ROE=15% Disney generated a profit of 15 cents for every dollar in its average equity throughout
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known to cause infections and also sometimes become chronic. Infections can lead to death but this chemical‚ in small amounts is not known to lead to death. PCB becomes more dangerous in the short term when it decomposes. Decomposition of PCB is caused by heat. When PCB decomposes‚ the products are much more immediately dangerous. These products include; Hydrochloric acid‚ Phenolics‚ and Aldehyde. Hydrochloric acid can be immediately dangerous to life an health‚ the IDLH is 50ppm. Phenolics or
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1 EPS= $5.08 No. of shares= 300‚000 r=20% ROE=25% DPS=Total dividend/No. of shares=640000/300000=$2.13 Net income = EPS*No. of shares =5.08*300000 =1524000 g=Retention ratio*ROE =[1-(640000/1524000)*0.25 = (1-0.42)*0.25 =0.58*0.25=0.145=14.5% Po=D1/r-g =Do (1+g)/r-g =2.13(1+0.145)/0.20-0.145 =2.43885/0.055 = $44.34 Ans. 2 Industry growth rate g = Retention ratio*ROE = (1-0.41)*0.13 = 0.59*0
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48607 46061 Calculation done: Net Profit Margin 16.66% 20.54% 17.46% Asset Turnover 0.448 0.480 0.502 Equity Multiplier 1.855 1.711 1.789 DuPont Return on Equity 0.139 0.169 0.157 ROE‚ Competitors Qualcomm Inc. 20.34% 18.99% 18.22% ROE‚ Sector Telecommunications Equipment –% 17.68% 16.68% ROE‚ Industry Technology –% 23.13% 21.80% Results of DuPont Analysis for CISCO: The net profit margin is the after tax profit a company generates for each dollar of revenue. A
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