Western Wear has total sales of $642,100,EBIT of $93,900,net income of $50,800,current assets of $153,500,total assets of $658,000,current liabilities of $78,900,and total liabilities of $213,600.What are the values of the three components of the DuPont identity?

Question

Quizplus · Accepted Answer

The components of the Dupont identity are:

Return on Assets (ROA) = Net Income / Total Assets
Asset Turnover Ratio (ATO) = Total Sales / Total Assets
Financial Leverage = Total Assets / Total Equity

Using the given values, we can calculate:

ROA = $50,800 / $658,000 = 7.71%
ATO = $642,100 / $658,000 = 0.98
Financial Leverage = $658,000 / ($213,600 + Equity)
Equity = $658,000 - $213,600 = $444,400
Financial Leverage = $658,000 / $444,400 = 1.48

Therefore, the answer is C) 7.91 percent; .98; 1.48.

Western Wear Has Total Sales of $642,100,EBIT of $93,900,net Income