Question

Bethesda Mining Company reports the following balance sheet information for 2015 and 2016.

Answer 1

Answer:

ROE for Bethesda Mining company = 24.28%

Explanation:

ROE using Du Pont = $\frac{net profit}{sales}$×$\frac{sales}{assets}$×$\frac{assets}{equity}$

the simple way is to solve the equation before substituting. The asset numerator cancels the asset denominator so does the sales numerator to the sales denominator.

so we are left with ROE =    $\frac{net profit}{equity}$ = 100,381 / 413348 = 24.28%

Answer 2

Answer: return on equity = 29.31%

Explanation:

DuPont analysis

net income = 100381

sales = 2246873

total assets = 892598

total shareholders equity = 217000

**total debt = 565510

return on equity = profit margin × asset turnover  × financial leverage

return on equity = (net income/sales) × (sales/total assets) × (total  debt/total shareholders equity)

return on equity = (100381/ 2246873) × (2246873/ 892598) × (565510 /217000)

return on equity = 0.044675867 × 2.5172836 × 2.6066039866

return on equity = 4.4675867% × 2.5172836 × 2.6066039866

return on equity = 29.3143 = 29.31%

**

total debt workings  = account payable + notes payable + long term debt

190422 + 137088 + 238000 =565510

DuPont analysis seeks to measure and critically analyse a company's ability increase its return on equity. DuPont analysis dissects the return on equity ratio, provide a clear diagnosis with regards to  

what decreases or increases the return on equity and helps

identify areas where a company should improve in order to increase shareholders return.  

the return on equity is 29.31%. profit margin is 4.467%, mean income is 4.467% of sales revenue.95.533% of sales revenue goes to expenses,that is one area that needs improvement

the company try to manage expenses.