Answered

Get personalized answers to your unique questions on IDNLearn.com. Ask anything and receive prompt, well-informed answers from our community of experienced experts.

California Company included the following items in its financial statements for ​, the current year​ (amounts in​ millions):
Payment of long-term debt ......$17,300 Dividends paid ...........$225
Proceeds from Issuance Net sales:
of common stock 8,425 Current year 35,000
Total liabilities: Preceding year 78,000
Current year-end 32,319 Net income:
Preceding year-end 38,039 Current year 9,011
Total stockholders' equity Preceding year 2,010
Current year-end 23,473 Operating income:
Preceding year-end 14,037 Current year 9.126
Long-term liabilities 6,665 Preceding year 4,004
Requirement:
Use DuPont Analysis to calculate ​'s return on assets and return on common equity during ​(the current​ year). The company has no preferred stock outstanding. Start by calculating the rate of return on total assets​ (ROA). Select the DuPont model formula needed and then enter the amounts to calculate ROA for 2018.

Sagot :

Zvikoidn

Answer:

3.83 %

Explanation:

Using the  DuPont model formula :

Return on Equity = Return on Assets x Assets / Equity

where,

Return on Assets  = Profit Margin x Total Assets Turnover

                               = (Net Income / Sales) x ( Sales / Total Assets)

                               = ( $9,011 / $35,000) x ($35,000 / 23,473 + 32,319)

                               = 2,57% x 0.627

                               = 1.61 %

Assets / Equity = ( 23,473 + 32,319) ÷ 23,473

                         = 2.38

therefore,

Return on Equity = 1.61 % x 2.38 = 3.83 %

Your participation means a lot to us. Keep sharing information and solutions. This community grows thanks to the amazing contributions from members like you. Your questions deserve reliable answers. Thanks for visiting IDNLearn.com, and see you again soon for more helpful information.