Chapter 11
Financial Statement Analysis
569
Analysis
Comment on the company's ability to cover its short-term debt obligations.
AP-22A (
4
)
Using the DuPont framework, calculate the missing item for each independent scenario.
i)
Net Profit Margin
10.30%
Asset Turnover Ratio
2.5
Equity Multiplier
2.3
ROE
?
ii)
Net Profit Margin
6.70%
Asset Turnover Ratio
?
Equity Multiplier
1.8
Net Income
$500,000
Beginning Shareholders’ Equity
$800,000
Ending Shareholders’ Equity
$1,300,000
iii)
Net Income
$200,000
Revenue
$600,000
Beginning Total Assets
$150,000
Ending Total Assets
$420,000
Equity Multiplier
?
ROE
35%
