Computing and Disaggregating Return on Equity Following are selected balance sheet and income statement information from a recent annual report for a company. $ millions April 2, 2020 March 28, 2019 Income statement information: Sales $20,244 $22,353 Net income 990 2,106 Balance sheet information: Total assets 18,639 18,318 Total stockholders’ equity 11,232 11,673 Answer the following questions, rounding your answers to two decimal places (for example, enter .46 for .455558). a. Calculate Ralph Lauren’s return on equity for the fiscal year ended April 2, 2020. Answer b. Disaggregate return on equity to its DuPont components of activity (profit margin), activity (asset turnover), and leverage (financial leverage). Demonstrate how the product of the components is equal to return on equity. Profit margin × Asset turnover × Financial leverage = Return on equity Answer × Answer × Answer = Answer Answer Answer Answer
Computing and Disaggregating Return on Equity Following are selected balance sheet and income statement information from a recent annual report for a company. $ millions April 2, 2020 March 28, 2019 Income statement information: Sales $20,244 $22,353 Net income 990 2,106 Balance sheet information: Total assets 18,639 18,318 Total stockholders’ equity 11,232 11,673 Answer the following questions, rounding your answers to two decimal places (for example, enter .46 for .455558). a. Calculate Ralph Lauren’s return on equity for the fiscal year ended April 2, 2020. Answer b. Disaggregate return on equity to its DuPont components of activity (profit margin), activity (asset turnover), and leverage (financial leverage). Demonstrate how the product of the components is equal to return on equity. Profit margin × Asset turnover × Financial leverage = Return on equity Answer × Answer × Answer = Answer Answer Answer Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Computing and Disaggregating Return on Equity
Following are selected
| $ millions | April 2, 2020 | March 28, 2019 |
|---|---|---|
| Income statement information: | ||
| Sales | $20,244 | $22,353 |
| Net income | 990 | 2,106 |
| Balance sheet information: | ||
| Total assets | 18,639 | 18,318 |
| Total |
11,232 | 11,673 |
Answer the following questions, rounding your answers to two decimal places (for example, enter .46 for .455558).
a. Calculate Ralph Lauren’s return on equity for the fiscal year ended April 2, 2020.
Answer
b. Disaggregate return on equity to its DuPont components of activity (profit margin), activity (asset turnover), and leverage (financial leverage). Demonstrate how the product of the components is equal to return on equity.
| Profit margin | × | Asset turnover | × | Financial leverage | = | Return on equity |
|
Answer |
× |
Answer |
× |
Answer |
= | Answer |
| Answer | Answer | Answer |
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