Dupont Formula

The dupont system of analysis is used to dissect the firms financial statement and
to assess its financial condition. Dupont systems first as follows:
ROA= Net Profit Margin x Total asset turnover
Spritzer substituted into the Dupont Formula:
ROA= 8.9% x 0.81= 7.30%
This value same as calculated earlier. Spritzer have a low profit margin which is
8.9% but high total asset turnover. This result reasonably good return on total asset.
Modified Dupont Formula
ROE= ROA x FLM
ROE= 7.30% x FLM
Which FLM refer to (Total asset / common stockholder equity)= 311,738/215546=
1.45 as the equity multiplier.
So 7.30 x 1.45 = 10.58= ROE
Spritzer low ROE is the consequence of slow collections of accounts receivables,
which resulted in high levels of receivables and therefore high levels of total asset,
the high total asset slowed Spritzer total asset turnover, driving down its ROA,
which then down its ROE. By using the DuPont systems of analysis, we found that
slow collection of receivables caused spritzer the below average industry and global
ROE.

Dividen Policy