What is the company Net Income

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Question 1 - The famous Dupont Identity breaks Return on Equity (ROE) into three components: Profit Margin, Total Asset Turnover, and Financial Leverage (Assets/Equity).

French Corp. has an Asset/Equity ratio of 1.55. Their current Total Asset Turnover has recently fallen to 1.20, bringing their ROE down to 9.1%.

a) What is this firm's Profit Margin?

B) If the company were able to improve its Total Asset Turnover to 1.8, what would be their new ROE?

Question 2 - Sousa, Inc., has Sales of $37.3 million, Total Assets of $26.5 million, and Total Debt of $11.3 million. The company's Profit Margin is 6 percent.

a) What is the company's Net Income?

b) What is the ROA?

c) What is the ROE?

Reference no: EM132718462

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