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Bella's Bakery has a net profit of $75,000 and sales of $1,200,000. It has total assets of $10,000,000. Its book value/equity is $6,500,000 and it pays out 40% of earnings as dividends. Required: a. What's its net profit margin, equity multiplier, and total asset turnover ratio? b. What is the return on equity using the DuPont Identity formula?

Bella's Bakery has a net profit of $75,000 and sales of $1,200,000. It has total assets of $10,000,000. Its book value/equity is $6,500,000 and it pays out 40% of earnings as dividends. Required: a. What's its net profit margin, equity multiplier, and total asset turnover ratio? b. What is the return on equity using the DuPont Identity formula?

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter7: Analysis Of Financial Statements
Section: Chapter Questions
Problem 6P
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Bella's Bakery has a net profit of $75,000 and sales of $1,200,000. It has total assets of $10,000,000. Its book value/equity is $6,500,000 and it pays out 40% of earnings as dividends. Required: a. What's its net profit margin, equity multiplier, and total asset turnover ratio? b. What is the return on equity using the DuPont Identity formula?
Transcribed Image Text:Bella's Bakery has a net profit of $75,000 and sales of $1,200,000. It has total assets of $10,000,000. Its book value/equity is $6,500,000 and it pays out 40% of earnings as dividends. Required: a. What's its net profit margin, equity multiplier, and total asset turnover ratio? b. What is the return on equity using the DuPont Identity formula?
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