The component values used in the Du Pont analysis for 2015 are:
A) 12.7%, 0.37, and 1.19.
B) 12.7%, 1.77, and 1.19.
C) 19.2%, 1.77, and 1.19.
D) 19.2%, 0.37, and 2.11.
E) 12.7%, 1.77, and 2.11.

Question

The component values used in the Du Pont analysis for 2015 are:
A) 12.7%, 0.37, and 1.19. 
B) 12.7%, 1.77, and 1.19. 
C) 19.2%, 1.77, and 1.19. 
D) 19.2%, 0.37, and 2.11. 
E) 12.7%, 1.77, and 2.11.

Quizplus · Accepted Answer

The Du Pont analysis formula is:
ROE = Net profit margin x Asset turnover x Equity multiplier
Using the given values for ROE (12.8%), net profit margin (2.2%), and asset turnover (0.57), we can solve for the equity multiplier:
12.8% = 2.2% x 0.57 x EM
EM = 1.77
Therefore, the answer is B, which includes the correct values for net profit margin (2.2%), asset turnover (0.57), and equity multiplier (1.77).

The Component Values Used in the Du Pont Analysis for 2015