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

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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