Calculate and interpret the return on equity using the Modified Dupont Method all four years of data.
Information for calculating the ROA and ROE using the Dupont Method for three competitors to Smith Company, Inc. is also provided below.
Smith Company, Inc., financial statements
(2018) Competitor 1 Competitor 2 Competitor 3
Net Profit Margin 0.082 0.11 0.03
Total Asset Turnover 0.88 0.9 0.55
ROA 0.07216 0.099 0.0165
FLM 3.3 2.5 5.5
ROE 0.238128 0.2475 0.09075
NOTE: The five-factor DuPont method is as follows:
= Tax Burden * Interest Burden * Operating Margin * Asset Turnover * Equity Multiplier
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A financial statement and balance sheet have been included
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