Find return on equity using three components of dupont

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Reference no: EM132039317

For the firms in the table below, find the return on equity using the three components of the DuPont identity: operating efficiency, as measured by the profit margin (net income/sales); asset management efficiency, as measured by asset turnover (sales/total assets); and financial leverage, as measured by the equity multiplier (total assets/total equity).

Essentially calculate the equity, profit margin, asset turnover, equity multipler for EACH company. Write results down in a chart. Then using those data points, calculate the ROE for each company. Which company has been best to its shareholders?

Company Sales Net Income Total Assets Liabilities

PepsiCo $66,357 $6,735 $77,320 $53,183

Coca-Cola $46,848 $8,436 $89,943 $56,825

McDonald's $28,122 $5,855 $36,529 $20,625

Reference no: EM132039317

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