You are assessing the performance of a retail company, Alpha. The income statement and balance sheet for Alpha at the end of 2019 and 2020 are presented below. income statement 2020 2019 revenue 750 720 cost of goods sold 400 450 depreciation 50 50 operating profit 300 220 interest expenses 30 25 profit before tax 270 195 tax expenses 90 70 net profit 180 125 balance sheet 2020 2019 assets non current asset 2,000 1,800 accumulate depreciation 500 450 total non current asset 1,500 1,350 current asset inventory 400 550 trade receivables 600 550 bank 200 250 total current asset 1,200 1,350 total asset 2,700 2,700 equity and liabilities equity contributed equity 1,000 1,000 accumulated retained earnings 500 450 total equity 1,500 1,450 liabilities non current liabilities long term loans 500 400 current liabilities trade payables 550 750 other payables 150 100 total current liabilities 700 850 total liabilities 1,200 1,250 toal equity and liabilities 2,700 2,700 Using the DuPont Analysis technique, discuss the change in Return on Equity (ROE) between 2020 and 2019
You are assessing the performance of a retail company, Alpha. The income statement and balance sheet for Alpha at the end of 2019 and 2020 are presented below. income statement 2020 2019 revenue 750 720 cost of goods sold 400 450 depreciation 50 50 operating profit 300 220 interest expenses 30 25 profit before tax 270 195 tax expenses 90 70 net profit 180 125 balance sheet 2020 2019 assets non current asset 2,000 1,800 accumulate depreciation 500 450 total non current asset 1,500 1,350 current asset inventory 400 550 trade receivables 600 550 bank 200 250 total current asset 1,200 1,350 total asset 2,700 2,700 equity and liabilities equity contributed equity 1,000 1,000 accumulated retained earnings 500 450 total equity 1,500 1,450 liabilities non current liabilities long term loans 500 400 current liabilities trade payables 550 750 other payables 150 100 total current liabilities 700 850 total liabilities 1,200 1,250 toal equity and liabilities 2,700 2,700 Using the DuPont Analysis technique, discuss the change in Return on Equity (ROE) between 2020 and 2019
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You are assessing the performance of a retail company, Alpha. The income statement and balance
sheet for Alpha at the end of 2019 and 2020 are presented below.
| income statement | 2020 | 2019 |
| revenue | 750 | 720 |
| cost of goods sold | 400 | 450 |
| 50 | 50 | |
| operating profit | 300 | 220 |
| interest expenses | 30 | 25 |
| profit before tax | 270 | 195 |
| tax expenses | 90 | 70 |
| net profit | 180 | 125 |
| balance sheet | 2020 | 2019 |
| assets | ||
| non current asset | 2,000 | 1,800 |
| 500 | 450 | |
| total non current asset | 1,500 | 1,350 |
| current asset | ||
| inventory | 400 | 550 |
| trade receivables | 600 | 550 |
| bank | 200 | 250 |
| total current asset | 1,200 | 1,350 |
| total asset | 2,700 | 2,700 |
| equity and liabilities | ||
| equity | ||
| contributed equity | 1,000 | 1,000 |
| 500 | 450 | |
| total equity | 1,500 | 1,450 |
| liabilities | ||
| non current liabilities | ||
| long term loans | 500 | 400 |
| current liabilities | ||
| trade payables | 550 | 750 |
| other payables | 150 | 100 |
| total current liabilities | 700 | 850 |
| total liabilities | 1,200 | 1,250 |
| toal equity and liabilities | 2,700 | 2,700 |
Using the DuPont Analysis technique, discuss the change in Return on Equity (ROE) between 2020
and 2019
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