TuPont Corp

question 28

Essay

TuPont Corp.has net income of $1.95 million, an effective tax rate of 35 percent, interest expense of $400,000, an asset turnover of 2.0, and $14 million in total assets, of which $7 million is debt.Use the DuPont system to calculate its ROE, decomposed into leverage ratio, asset turnover, profit margin, and debt burden.

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Definitions:

Materials Efficiency

Refers to the measure of how effectively resources and materials are used in the production process to minimize waste and reduce environmental impact.

Sustainable Yield

The rate at which a natural resource can be harvested without compromising its ability to regenerate or sustain its future productivity.

Renewable Resources

Natural resources that can be replenished at a rate comparable to their consumption, such as solar energy, wind, and biomass.

Perpetual Resources

Resources that are continuously available and not significantly diminished by human use, such as solar energy.