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bogdanovich [222]
3 years ago
7

DuPont system of analysis Use the following ratio information for Johnson International and the industry averages for​ Johnson's

line of business​ to:
a. Construct the DuPont system of analysis for both Johnson and the industry.
b. Evaluate Johnson​ (and the​ industry) over the​ 3-year period.
c. Indicate in which areas Johnson requires further analysis.​ Why?


Johnson 2013 2014 2015

Financial Leverage Multiplier 1.75 1.75 1.85
Net Profit Margin 0.059 0.058 0.049
Total Asset turnover 2.11 2.18 2.34

Industry Averages

Financial Leverage Multiplier 1.67 1.69 1.64
Net Profit Margin 0.054 0.047 0.041
Total Asset turnover 2.05 2.13 2.15
Business
1 answer:
Verizon [17]3 years ago
8 0

Answer:

a) DuPont analysis for Johnson International

2013: 0.059 x 2.11 x 1.75 = 0.2179 = 21.79%

2014: 0.058 x 2.18 x 1.75 = 0.2213 = 22.13%

2015: 0.049 x 2.34 x 1.85 = 0.2121 = 21.21%

b) DuPont analysis for industry averages

2013: 0.054 x 2.05 x 1.67 = 0.2121 = 21.21%

2014: 0.047 x 2.13 x 1.69 = 0.1692 = 16.92%

2015: 0.041 x 2.15 x 1.64 = 0.1446 = 14.46%

c) Johnson International's drivers follow the same tendency as the industry's average, e.g. net profit margin decreased in a similar manner, and total asset turnover increased also in a similar manner to the industry's average. The only driver that doesn't follow the industry's trend is financial leverage. While other companies in the same industry decreased their financial leverage, Johnson increased it. You should further analyze why this happened and what are the potential consequences.

Explanation:

The DuPont analysis is used to break down ROE into 3 different components and that way you can analyze whether a company's high ROE comes along with a high risk. The following formula is used to calculate ROE based on 3 different factors:

R OE = net pro fit margin x total assets turnover x financial leverage

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On September 3, 2018, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows:
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Answer:

In Robers Company:

Debit Accumulated depreciation $75,000

Debit Equipment $72,500

Debit Cash $10,000

Credit Equipment $145,000

Credit Gain on exchange asset $12,500

In Phifer Corporation

Debit Accumulated depreciation $83,000

Debit Equipment $82,500

Debit Loss on exchange asset $9,500

Credit Cash $10,000

Credit Equipment $165,000

Explanation:

In Robers Company:

Book value of the equipment =  $145,000 - $75,000 = $70,000

Fair value of the equipment: $82,500 > Book value

The company will record gain on exchange:

Debit Accumulated depreciation $75,000

Debit Equipment $72,500

Debit Cash $10,000

Credit Equipment $145,000

Credit Gain on exchange asset $12,500

In Phifer Corporation

Book value of the equipment =  $165,000 - $83,000 = $82,000

Fair value of the equipment: 72,500 < Book value of the equipment

The company will record loss on exchange:

Debit Accumulated depreciation $83,000

Debit Equipment $82,500

Debit Loss on exchange asset $9,500

Credit Cash $10,000

Credit Equipment $165,000

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3 years ago
Why is accounting hard?
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Answer:

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3 years ago
On December 31, Jarden Co.'s Allowance for Doubtful Accounts has an unadjusted credit balance of $14,000. Jarden prepares a sche
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Answer and Explanation:

a. The required balance of allowance for doubtful debts is shown below:

Particulars       Account receivable  %             Estimated uncollectible

Not yet due    $860,000                1.20%        $10,320

1 to 30 days    $344,000                1.95%        $6,708

31 to 60 days  $68,800                  6.45%       $4,438

61 to 90 days  $34,400                  32.50%    $11,180

Over 90 days $13,760                    67.00%    $9,219

Estimated balance                                           $41,865

b. The adjusting entry is

Bad debt expense Dr ($41,865 - $14,000) $27,865

         To Allowance for doubtful debts $27,865

(being the bad debt expense is recorded)

For recording this we debited the bad debt expense as it increased the expenses and credited the allowance for doubtful debts as it decreased the assets

8 0
3 years ago
On the foundation day of an organization, the president of the organization awards exceptionally performing employees with a bou
MA_775_DIABLO [31]

Answer:

Ceremony

Explanation:

Ceremony which can as well be reffered to as Rites and Rituals in an organization can be regarded as a pre-planned events which has social, formalities as well as latents purposes. This manifest purpose have effect on how the organization is working and in aiding the acheiving the organizational goals. It involves motivation of employee in the organization by giving bout award to the outstanding among them. For instance, On the foundation day of an organization, the president of the organization awards exceptionally performing employees with a bouquet and a plaque at a banquet every year is an example of a ceremony.

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3 years ago
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dexar [7]

Answer:

Increase in income= (68,000 - 16,000) - 50,000= 2,000

New income= 68,000 - 16,000= 52,000

Explanation:

Giving the following information:

Product Y can be sold at the split-off point for total annual revenues of $50,000, or it can be processed further at a total annual cost of $16,000 and then sold for $68,000.

Increase in income= (68,000 - 16,000) - 50,000= 2,000

New income= 68,000 - 16,000= 52,000

3 0
3 years ago
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