Chapter 4, Problem 8DQ

Summary Introduction

To determine: Thestrengths and weaknesses of the Company H using the DuPont analysis and comparison of it with the competitors.

Introduction:

DuPont analysis:

The DuPont analysis is the analysis, which analyses the asset turnover, net profit margin, and financial leverage. The DuPont Corporation has developed this analysis.

Return on Assets:

The Return on Assets ratio shows the profitability of the business in relation to the other assets. This ratio determines the efficiency of a business to use the assets of the company.

Return on Equity:

Return on Equityis a profitability ratio, which determines the profitability with the viewpoint of the shareholders. This finds out whether the fund of the shareholders are efficiently used or not to generate profit.

Total assets turnover:

The total assets turnover ratio determines the effectiveness of a firm. This ratio measures the capability of a company to generate sales from the use of its assets.