Determining the dupont identity

Assignment Help Finance Basics
Reference no: EM132630405

The DuPont Identity

Many times ratios computed for a firm give a conflicting picture of performance. The DuPont Identity provides a way to breakdown ROE and investigate what areas of the firm need improvement.

The DuPont Identity indicates that a firm's return on equity depends on its operating efficiency (profit margin), asset use efficiency (total asset turnover), and financial leverage (equity multiplier).

Equity multiplier (EM) = TA/TE = 1 + debt/equity ratio

Based on the Du Pont identity, the following factors affect the growth rate:

- Profit margin

- Total asset turnover -

- Financial policy

- Dividend policy

Please explain how they affect the growth rate of a company.

Reference no: EM132630405

Questions Cloud

Philosophies of deterrence and rehabilitation : Compare and contrast the assumptions associated with the philosophies of deterrence and rehabilitation.
COMP7701 Advanced Enterprise Security Assignment : COMP7701 Advanced Enterprise Security Assignment Help and Solution, Flinders University - Assessment Writing Service - Perform a literature review
Explain the choices and decisions being made : Add your opinion about the choices and decisions being made-if this was your company, would you make this choice? What would you do differently?
Some people think political parties are getting stronger : Some people think political parties are getting stronger. Other people think they are getting weaker. What do you think?
Determining the dupont identity : Many times ratios computed for a firm give a conflicting picture of performance.
Find how could the salesforce contribute to analyzing : Find How could the salesforce contribute to analyzing and responding to a changing market environment? How can a company try to anticipate
Calculate the price of the bond at the time of issue : 1. Assuming the yield to maturity on the bond is 11.25%, calculate the price of the bond at the time of issue.
How do you keep in step with the situations and challenges : Some Americans identify themselves as being lesbian, gay, bisexual, or transgender. While EEOC contends that sexual orientation and gender identity fall under.
Find out the dividend of the next four years : ABC private limited as given the dividend of $5 last year and has promised to increase the dividend by 8% each year for the next four years.

Reviews

Write a Review

Finance Basics Questions & Answers

  What overall percent did the price increase

Suppose a certain item increased in price by 19% a total of 4 times and then decreased in price by 7% a total of 2 times. By what overall percent did the price

  Providence redevelopment agency

The Providence Redevelopment Agency currently has an A rates municipal bond outstanding, with a coupon rate of 5.00%, paid semi-annually, due to mature in eight

  What are some of the reasons up front points

What are some of the reasons up front points and fees are so common in the mortgage business?

  How much money can you get by selling your rights

If you currently own 2,500 shares of stock in the company and decide not to participate in the rights offering, how much money can you get by selling your right

  Confidence interval and statistical tie

Explain the meaning of a candidate lead is outside the margin of error by 95% confidence interval and statistical tie.

  Weighted average time to maturity of a financial instrument

Duration is defined as the weighted average time to maturity of a financial instrument. List at least four other key things you know about duration.

  Financial technique should you use to calculate value

You are considering investing in a retirement fund that requires you to deposit $5,000 per year, and you want to know how much the fund

  Investor be expected to pay per share

If the current price of the stock is $18.90, and the equity cost of capital for the company that released the shares is 6.4%, what price would an investor be expected to pay per share five years into the future?

  What is the payback period

The Love Living In Paradise Company wants to calculate how long it will take to recover their initial investment on a project.

  What is the value of this bond assuming a required rate

Geico insurance issued a 10 year bond with an annual coupon of 11%. What is the value of this bond assuming a required rate of return of 7.02%?

  Access the financial actuals

Access the financial actuals.

  Calculate the default risk premium

Nikki G's Corporation's 10-year bonds are currently yielding a return of 6.50 percent. The expected inflation premium is 1.20 percent annually and the real interest rate is expected to be 3.00 percent annually over the next ten years.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd