Using DuPont analysis is a quick and relatively easy way to assess the overall health of a firm....

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Using DuPont analysis is a quick and relatively easy way to assess the overall health of a firm. This week’s lesson (page IV) includes information on the DuPont equation. Go to finance.yahoo.com and choose a company by entering the company name in the box to the left of “Get Quotes.” Once you have the company overview page open, to the left you will see a list of links for further information on that firm. Near the bottom of the link column are financial statements. Open the firm’s Income Statement and Balance Sheet and use the information there to calculate all parts of the DuPont Ratio for the past three years; do not use Nike. If your firm does not have 3 years of full information, choose a different firm. Report each ratio value as well as the numerator and denominator of each of the 4 ratios for the past 3 years (12 ratios in total). Discuss the trends revealed in each ratio. Please be sure to note your firm’s name in the title of your post and please do not duplicate firms. I am posting information on Nike as an example; you might want to study that post before you begin.
	
Document Preview: Using DuPont analysis is a quick and relatively easy way to assess the overall health of a firm. This week’s lesson (page IV) includes information on the DuPont equation.  Go to finance.yahoo.com and choose a company by entering the company name in the box to the left of “Get Quotes.” Once you have the company overview page open, to the left you will see a list of links for further information on that firm. Near the bottom of the link column are financial statements. Open the firm’s Income Statement and Balance Sheet and use the information there to calculate all parts of the DuPont Ratio for the past three years; do not use Nike. If your firm does not have 3 years of full information, choose a different firm.  Report each ratio value as well as the numerator and denominator of each of the 4 ratios for the past 3 years (12 ratios in total).  Discuss the trends revealed in each ratio.  Please be sure to note your firm’s name in the title of your post and please do not duplicate firms.  I am posting information on Nike as an example; you might want to study that post before you begin.

David · Accepted Answer

ECONOMICS - 286017_3_Mod4 
GDP – Introduction 
Gross Domestic Product (GDP) is an economic indicator which is used to measure the size or 
total market value of a nation’s economy i.e. summation of total value of goods and services 
produced in an economy. Following are the major components of GDP: 
 Household Consumption (C) 
 Investment (I) 
 Government Spending (G) 
 Net Exports (NX) 
The following equation helps in explaining the relationship between these four components 
and GDP: 
GDP (Y) = Household Consumption (C) + Investment (I) +  Government Spending 
(G) + Net Exports (NX) 
Or, Y = C + I + G + NX 
Household Consumption 
Household consumption is also known as the private consumption expenditure which relates 
to the expenditure by households on various goods and services. For example: the money I 
spend for dinner at McDonald’s will be counted in the calculation of private consumption. 
Thus the total spending on durable goods, non durable goods and services constitutes the 
private consumption expenditure. 
The private consumption expenditure is largely impacted by the following four factors: 
 Disposable income which is the income net of taxes 
 Interest rates 
 Wealth, and  
 Anticipated future income 
Consumption is the largest component of GDP, and on an average it accounts for close to 
60% of the GDP. The consumption in an economy is directly proportional to the economic 
conditions, i.e. if the economic condition is stable and positive, people tend to spend more 
and save less. This translates into higher private consumption. 
Investment 
Investments relate to the total spending by the business houses or corporate in purchasing that 
helps them in producing consumer goods.

Using DuPont analysis is a quick and relatively easy way to assess the overall health of a firm. This week’s lesson (page IV) includes information on the DuPont equation. Go to finance.yahoo.com and...

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