acg6175_cmba_summer_2015__final_exam.docx

Jun 14th, 2016
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acg6175_cmba_summer_2015__final_exam.docx

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According to Du Pont, ROE can be decomposed using the following:ROE = Net income/Equity = Net income/Sales * Sales/Assets * Assets/Equity1) ROE decomposition is attached in Excel2) New calculation is attached in Excel3) It can be seen that there is no change in return on equity from the change in sales only.The values are the same. But there is a change in the intermediate numbers. For example,due to low sales, Net income/Sales ratio have increased in magnitude while sales/Assetshave decreased.4) The company is in red making losses. It is clear that the current assets have improvedmor

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