Perform the 3 step dupont return on equity analysis

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Reference no: EM132401512

Instructions:

First Assignment

This discussion has 2 parts:

You are working as a financial analyst at a brokerage firm and a colleague says to you "the Potts Corporation had a return on equity (ROE) of 20% last year. We should recommend the stock to our clients." How would you respond to your colleague?

(Note: Your response for this question should be no more than 100 words)

A corporation's earnings and associated ratios, such as earnings per share, are metrics that investors and other stakeholders use when making decisions. The SEC recently began investigating corporations for manipulating earnings via rounding errors. In the early 2000s, it became clear that corporation's rarely missed earnings estimates provided by financial analysts.

Offer your opinion on the ethics underlying these practices, any possible broader implications of such behavior, and any real-life experiences you may have come across that are similar.

Second Assignment

Use the Excel file M2_Problem_Set_Excel Preview the documentthat you provide and the formula sheet in the book to make the calculations. Be sure to use cell references.

Write one sentence (in the Excel File) next to each ratio you calculated in Question 1 describing what that number means in words.

For example, if you calculate the average collection period as 40, you should write something like "on average, it takes 40 days for Freemont Corporation to collect its accounts receivable."

Third Assignment

Complete the common-size and common-base year financial statements [Income Statement (IS) and Balance Sheet (BS)] or Brady Corp. in Excel in the M2_Project_Excel Preview the documentfile I provided. Be sure to include spark lines to easily show the trends. Write a brief analysis in the Excel worksheet of the main trends that you notice.

Perform the 3 step DuPont Return on Equity (ROE) analysis for Brady Corp. using cell references. Write a brief analysis (50-100 words) of what you learn from the DuPont analysis on your Excel worksheet.

Attachment:- Excel File.rar

Reference no: EM132401512

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