Principles of Managerial Finance

72 PART 1 Introduction to Managerial Finance

FIGURE 2.2 DuPont System of Analysis The DuPont system of analysis with application to Bartlett Company (2003)

Sales $3,074,000

minus Cost of Goods Sold $2,088,000 minus

divided by

Operating Expenses Income $568,000 Statement minus Interest Expense $93,000 minus Taxes $94,000

minus Preferred Stock Dividends $10,000

Earnings Available for Common Stockholders $221,000 Net Profit Margin 7.2% Sales $3,074,000

divided by

multiplied by

Sales $3,074,000 Total Asset Turnover 0.85

Common Stock Equity $1,754,000

Total Assets $3,597,000

Return on Common Equity (ROE) 12.6%

plus

divided by

Total Liabilities $1,643,000

Financial Leverage Multiplier (FLM) 2.06

Return on Total Assets (ROA) 6.1%

Total Liabilities and Stockholders’ Equity = Total Assets Stockholders’Equity $3,597,000

$1,954,000

Current Assets $1,223,000 plus Net Fixed Assets $2,374,000

Current Liabilities $620,000 plus Long-Term Debt $1,023,000

BalanceSheet