Understanding the dupont formula

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Reference no: EM13100064

While the industry average ROE is about 15%, average profit margin of 50%, asset efficiency of 10%, and leverage ratio of 3, the ROE for ABC, Inc., using data from January 2011, was 8.00% on an average shareholder's equity of $25,000,000. Revenue last year for ABC was $6,000,000 using $80,000,000 in assets. Your boss, the CIO, has asked you to prepare some ideas to present at the next Strategy Assessment. Based on your understanding of the DuPont Formula, what observations/recommendation could you make to management about the existing business model?

Reference no: EM13100064

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