Week-2-Chapter-3-Financial-Build-A-Mode L
Week-2-Chapter-3-Financial-Build-A-Mode L
Week-2-Chapter-3-Financial-Build-A-Mode L
Build a Model
Chapter: 3
Problem: 15
b. Has Joshua & White's ability to manage its assets improved or worsened? Explain.
Joshua & White's ability to manage assets has worsened. Not only is the 2019 debt-asset ratio higher
standard but it has also increased from 2018. Which means that the company has increased liabilites
putting itself at risk of defaulting in the instance that interest rates were to rise suddenly.
c. How has Joshua & White's profitability changed during the last year?
Joshua & White's sales and net income have increased since 2018. Therefore, the company saw a ris
profit margin or their profit per dollar of sales. Their profit margin is significantly over the industry aver
d. Perform an extended Du Pont analysis for Joshua & White for each year.
ROE = PM x TA Turnover x Equity Multiplier
2019 20.05% 11.96% 1.09 1.53
2018 15.80% 8.63% 1.22 1.50
The ROE has improved because of the profit margin increases - regardless of the decrease in total as
This company became more profitable and financially leveraged
than industry
and potentially
e in their net
age for 2019 .
set turnover.