Using the info below on the DuPont System. Comment on each yearand what's significant about it.
The DuPont System Operating Asset Financial Efficiency Utilization Leverage Profit margin X Total asset turnover = Return on investment X Financial leverage = Return on equity Net income X Net sales = Net Income X Total assets = Net income Net sales Total assets Total assets Stockholders' equity Stockholders' equity Comments 2015 0.02091 3.39910 0.07108 3.14967 0.22389 2014 0.01867 3.33733 0.06232 2.68422 0.16728 2013 0.01982 3.39696 0.06733 2.79544 0.18822
Using the info below on the DuPont System. Comment on each yearand what's significant about it.
| The DuPont System | ||||||||||
| Operating | Asset | Financial | ||||||||
| Efficiency | Utilization | Leverage | ||||||||
| Profit margin | X | Total asset turnover | = | Return on investment | X | Financial leverage | = | Return on equity | ||
| Net income | X | Net sales | = | Net Income | X | Total assets | = | Net income | ||
| Net sales | Total assets | Total assets | Stockholders' equity | Stockholders' equity | ||||||
| Comments | ||||||||||
| 2015 | 0.02091 | 3.39910 | 0.07108 | 3.14967 | 0.22389 | |||||
| 2014 | 0.01867 | 3.33733 | 0.06232 | 2.68422 | 0.16728 | |||||
| 2013 | 0.01982 | 3.39696 | 0.06733 | 2.79544 | 0.18822 | |||||
Related questions
** PM, AT, ROA, FL, and ROE accounting question. Thanks for the help!
| Summary income statements and balance sheets are presented for the three largest companies in the chemical industry for fiscal year 2001 (in millions). For additional information, their Web sites (and ticker symbols) are www.dupont.com (DD), www.dow.com (DOW), and www.ppg.com (PPG). | |||
| Income Statement | |||
| DuPont | Dow | PPG | |
| Revenues | $24,726 | $27,805 | $8,169 |
| COGS | 16,727 | 22,015 | 5,137 |
| Gross Profit | 7,999 | 5,790 | 3,032 |
| SG&A Expenses | 4,513 | 2,807 | 1,764 |
| Net Income | 4,339 | (385) | 387 |
| Balance Sheet | |||
| DuPont | Dow | PPG | |
| Cash & Market Securities | $5,763 | $220 | $108 |
| Receivables, net | 3,903 | 5,098 | 1,416 |
| Inventories | 4,215 | 4,440 | 904 |
| Total Current Assets | 14,801 | 10,308 | 2,703 |
| Fixed Assets, net | 13,287 | 13,579 | 2,752 |
| Total Assets | 40,319 | 35,515 | 8,452 |
| Total Current Liabilities | 8,067 | 8,125 | 1,955 |
| Total Liabilities | 25,867 | 25,522 | 5,372 |
| Total Equity | 14,452 | 9,993 | 3,080 |
| The following additional information is provided for fiscal year 2000 (in millions): | |||
| DuPont | Dow | PPG | |
| Inventory | $4,658 | $3,463 | $1,121 |
| Receivables, net | 4,552 | 5,385 | 1,563 |
| Working Capital | 2,401 | 1,387 | 550 |
| Fixed Assets, net | 13,287 | 13,579 | 2,752 |
| Total Assets | 39,426 | 27,645 | 9,125 |
| Total Equity | 13,299 | 9,686 | 3,097 |
** Please fill out the below table. Also please show work/formulas used below the table if you are able. Thanks again!
| (4) Given the information presented on Sheet 1, calculate the DuPont Model for the three chemical companies for fiscal year 2001. Show calculations following the table. Assume all three companies had the same total common equity as total equity. | |||
| DuPont | Dow | PPG | |
| Profit Margin (PM) | |||
| Asset Turnover (AT) | |||
| Return on Assets (ROA) | |||
| Financial Leverage (FL) | |||
| Return on Equity (ROE) | |||
Selected year-end financial statements of Cabot Corporationfollow. (All sales were on credit; selected balance sheet amountsat December 31, 2015, were inventory, $55,900; total assets,$249,400; common stock, $85,000; and retained earnings,$48,092.)
| CABOT CORPORATION Income Statement For Year Ended December 31, 2016 | ||
| Sales | $ | 453,600 |
| Cost of goods sold | 297,550 | |
| Gross profit | 156,050 | |
| Operating expenses | 98,800 | |
| Interest expense | 3,900 | |
| Income before taxes | 53,350 | |
| Income taxes | 21,492 | |
| Net income | $ | 31,858 |
| CABOT CORPORATION Balance Sheet December 31, 2016 | ||||||
| Assets | Liabilitiesand Equity | |||||
| Cash | $ | 18,000 | Accounts payable | $ | 19,500 | |
| Short-term investments | 9,400 | Accrued wages payable | 3,800 | |||
| Accounts receivable, net | 33,600 | Income taxes payable | 3,300 | |||
| Notes receivable (trade)* | 6,000 | Long-term note payable,secured | ||||
| Merchandise inventory | 36,150 | by mortgage on plant assets | 66,400 | |||
| Prepaid expenses | 2,500 | Common stock | 85,000 | |||
| Plant assets, net | 152,300 | Retained earnings | 79,950 | |||
| Total assets | $ | 257,950 | Total liabilities andequity | $ | 257,950 | |
* These are short-term notes receivable arising from customer(trade) sales.
Required:
Compute the following: (1) current ratio, (2) acid-test ratio,(3) days' sales uncollected, (4) inventory turnover, (5) days'sales in inventory, (6) debt-to-equity ratio, (7) times interestearned, (8) profit margin ratio, (9) total asset turnover, (10)return on total assets, and (11) return on common stockholders'equity. (Do not round intermediatecalculations.)
| * These are short-term notes receivable arising from customer(trade) sales.
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