What is the return on Equity from the following data?

Question

Using the DuPont analysis, Sales $200,000; net income, $30,000; total assets, $100,000; and total debt, $40,000? A explanatory breakdown would be helpful so I can see the problem being worked out. I just can't figure this one out.

Using the same data, what is the return on assets? I came up with 30%, is this correct?

Answer 1

In DuPont analysis,
ROE = net profit/sales * sales/assets * assets/equity
ROE = net profit margin * asset turnover * equity multiplier
ROE = 30,000/200,000 * 200,000/100,000 * 100,000/equity
ROE = 30,000/equity

Problem is that your equity is not shown. If you assume equity muliplier is 1.0, then the ROE = 30,000/100,000 = 30%