Dupont decomposition to indicate profit margin

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Problem: For the fiscal year ending January 31, 2012 (2011), Target had total revenues of (in millions) $69,865 ($67,390) and net earnings of $2,929 ($2,920). Its total assets were $46,630 ($43,705) and its equity was $15,821 ($15,487).

Required:

  1. Estimate Target's return on equity (ROE) for each of these two years, using the DuPont decomposition to indicate profit margin, the asset turnover, and the firms financial leverage.
  2. Why has ROE changed?
  3. How would you compare the ROE drivers for Walmart and Target?

Reference no: EM132423185

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