Profit margin (%) Total asset turnover Equity multiplier ROE Company A 2018 33.2 0.345 1.20 2019 29.5 0.406 1.26 2020 36.9 0.330 1.13 Company B 2018 36.9 0.463 1.30 2019 33.5 0.360 1.23 2020 26.2...








































































Profit margin (%)




Total asset turnover




Equity multiplier




ROE




Company A






2018



33.2



0.345



1.20






2019



29.5



0.406



1.26






2020



36.9



0.330



1.13






Company B












2018



36.9



0.463



1.30






2019



33.5



0.360



1.23






2020



26.2



0.436



1.36









  1. Calculate ROE for both companies and interpret your answer. Which company will you prefer for investment in 2018, 2019 and 2020? Explain.

  2. Interpret the values in profit margin, total asset turnover and equity multiplier. Will your investment decision for 2018, 2019 and 2020 change once you use DuPont identity instead of ROE? Explain.


Note- answer both the parts of the question



Jun 06, 2022
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