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Calculate the ROE using the Dupont Identity

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Question - Parker Co. has provided the following financial information:

CL $2,000

NI $1,000

TD ratio 0.45

CR 2.20

PM 24.0%

ROE 13.6%

(a) Calculate the following:

Sales

Current Assets

Total Equity

Total Assets

Total Debt

Debt-Equity ratio

Parker Co.'s shareholders are interested in analyzing the ROE of 13.6%. Specifically, they'd like to understand how much of this return is related to the financial leverage of the company.

(b) Calculate the ROE using the Dupont Identity to determine where this profitability is coming from.

(c) Which of the 3 components of the DuPont Identity assesses financial leverage?

Reference no: EM132818026

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