Chapter 5, Problem 5.33BE

To determine

Return on Common shareholder’s equity:

It measures the net income available to common shareholders of the company. A company’s rate of return on equity shows the amount earned for each dollar invested by the common shareholders.

The DuPont framework’s calucaltion of return on sharesholders’ equity is as follows:

$\begin{array}{l}\text{Return on equity}\hfill \end{array}\text{=}\left(\text{Profit margin×Asset turnover×}\begin{array}{l}\text{Equity multiplier}\hfill \end{array}\right)$

To calculate: The three components of return on sharesholders’ equity under the DuPont framework of Company A for the year 2016.