The DuPont formula defines the net return on shareholders

| June 14, 2018

The DuPont formula defines the net return on shareholders’ equity as a function of the following components:•Operating margin •Asset turnover •Interest burden •Financial leverage •Income tax ratea.Calculate each of the five components listed above for 2010 and 2014, and calculate the return on equity (ROE) for 2010 and 2014, using all of the five components. Show calculations.b.Briefly discuss the impact of the changes in asset turnover and financial leverage on the change in ROE from 2010 to 2014.

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