# DuPont Model Calculations

DuPont Model Calculations

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Given: Information for the year one

Cash=\$16,080

Accounts Receivable=\$9,500

Prepaid=\$3,150

Supplies =\$675

Equipment =\$25,200

Accumulated Depreciation (A.D)-Equipment=\$8,150

Therefore, Accumulated Depreciation (A.D)= Equipment+\$8,150

Accumulated Depreciation (A.D)=\$25,200+\$8,150

This makes A.D to become =\$33,350

The total Assets for year one is the summation of all assets.

This then becomes: (Cash + Accounts Receivable + Prepaid + Supplies + Equipment +

Accumulated Depreciation).

Total Assets = (\$16,080 + \$9,500 + \$3,150 + \$675 + \$25,200 + \$33,350)

Total Assets = \$87,955

The Return on Investments (ROI) or Return on Assets (ROA) is calculated by finding a percentage of Net Income (given) over Total Assets.

ROI = Net Income/Total Assets

ROI = \$56,824/\$87,955

ROI = 0.65%

Given: Information for year two

Cash=\$20,000

Accounts Receivable=\$15,000

Prepaid=\$1,175

Supplies =\$2,675

Equipment =\$89,057

Accumulated Depreciation (A.D)-Equipment=\$36,800

Therefore, Accumulated Depreciation (A.D)= Equipment+\$36,800

Accumulated Depreciation (A.D)=\$89,057+\$36,800

This makes A.D to become =\$125,857

The total Assets for year two is the summation of all assets.

This then becomes: (Cash + Accounts Receivable + Prepaid + Supplies + Equipment +

Accumulated Depreciation).

Total Assets = (\$20,000 + \$15,000 + \$1,175 + \$2,675 + \$89,057 + \$125,857)

Total Assets = \$253,764

The Return on Investments (ROI) or Return on Assets (ROA) is calculated by finding a percentage of Net Income (given) over Total Assets.

ROI = Net Income/Total Assets

ROI = \$56,824/\$253,764

ROI = 0.22%

For us to find the Return on Equity (ROE) for the both years, the following formula is applied.

ROE = ROI X Total Assets/Common Equity

ROE for year one = 0.65% X \$87,955/\$82,600

ROE for year one then becomes 0.65 X 1.06

ROE = 0.69%

The ROE for year two then becomes 0.22% X \$253,764/\$82,600

ROE for year two equals 0.22 X 3.07

ROE = 0.68%

The extended DuPont equation for year one becomes:

ROE = (Net Profit Margin) (Total Asset Turnover) (Equity Multiplier)

=Net Income/Sales X Sales/Total Asset Turnover X Total Assets/Common

Equity

= (\$56,824/\$325,000) X (\$325,000/\$87,955) X (\$87,955/\$82,600)

= (0.17 X 3.7 X 1.06)

= 0.67%

For the second year, the ROE becomes:

ROE = (\$56,824/\$325,000) X (\$325,000/253,764) X (\$253,764/\$82,600)

= (0.17 X 1.28 X 3.07)

= 0.67%

The DuPont Model for both years one and two is 0.67%