Utilizing the income statement and balance sheet:
Calculate the DuPont ratio for the most recent year - long form, in other words, calculate profit margin, total asset turnover and equity multiplier and multiply the three together to calculate return on equity.
Show all of your work and include your I/S and B/S with your assignment.
Write a short paragraph about the sources of ROE for your company. Is ROE high or low because profit margins are high or low? Or, because asset turnover or financial leverage are high or low? Watch the PowerPoint animation posted in ELMS talking about a Dupont analysis.
Next, calculate the P/E and market/book value ratios for your company. For market/book, you should use the price, earnings and number of shares as of your company's most recent annual report (10K). The 10K is your best source for an accurate number of shares as of the date of the annual report. Using information in the text as background, what does your company's PE and market/book ratio (also called price/book ratio) say about your company? Look up the industry P/E for your company's industry. A good source of this information is Damodaran's NYU website (one of the best financial websites I've found):
How does your company's P/E and market to book ratio compare to the industry? What implications does this have for your company's growth potential?