DuPONT IDENTITYPROFIT MARGIN x TOTAL ASSETS TURNOVER x EQUITY MULTIPLIERSALESDIVIDED BYTOTAL ASSETSxTOTAL ASSETSDIVIDED BYCOMMONEQUITY=NET INCOMEDIVIDED BYSALESxRETURN ONEQUITY - ROEDuPont identity is ROE calculated by the breakup of threecomponents,.ROE essentially indicates how well the company usedreinvested earnings to generate additional earnings.In the nutshell, ROE represents how much profit acompany is able to generate given the resourcesprovided by its stockholders…
CURRENT RATIOCURRENT RATIOCURRENT ASSETS / CURRENTLIABILITIESAn indication of a company’sability to pay its short termobligations.If the current assets ofthe company are morethan twice its currentliabilities, that companyis considered to have agood short termfinancial strength…
P&G’sAVERAGECURRENTRATIOCURRENT RATIO 2008 – 2012C-PAVERAGECURRENTRATIOZILAVERAGECURRENTRATIO0.8 X2.56 X1.53 XGOODWEAK!OK
QUICK 0R ACID TEST RATIOA measure of a company’sliquidity and the ability to meetits obligations.It shows the perdollar relation ofeasily convertibleassets available topay off currentliabilities…CURRENT ASSETS INVENTORIES-CURRENTLIABILITES
P&G’sAVERAGEQUICKRATIOC-PAVERAGEQUICKRATIOZILAVERAGEQUICKRATIOQUICK RATIO 2008 – 20120.52 X1.22 X0.64 XWEAKERSTRONGWEAK
INVENTORY TURNOVERCOST OFGOODSSOLDINVENTORIES=INVENTORYTURNOVERRATIOSHOWS thenumber of timesthe company ‘sstock is sold andre-stocked.Determines thesales of acompany and itsability to restock.