Help w/Dupont Equation

[keb2016]

DuPont equation: The Rangoon Timber Company has the following relationships:

Sales/Total assets = 2.23; ROA = 9.69%; ROE = 16.4% $6.8 million interest expense, and the corporate tax rate is 35 percent. What was the company’s

depreciation and amortization expense? What are Rangoon’s profit margin and debt ratio? ***I am absolutely stumped on determining the depreciation and amortization expense! Any guidance on how to go about getting these amounts would be appreciated.

 

[Fedex16]

Depreciation and amortisation

You have various ratios incorporation "Return" ie Net profit. ROA is return on total assets ROE is return on equity or shareholders funds (Shares + Reserves etc). Sales /Total assets. If you can work out net profit and you know what the corporation tax expense is you will know what Dep'n and Amort'n is because corporation tax is charged after adding back Dep'n and Amort'n because they are disallowable expenses. However I agree with Denis there seems to be quite a lot info missing. Return (Net profit) usually excludes interest because it is payable to outside parties and is not a reflection on how well the company is performing. Interest cover, gearing ratios, debt/equity usually involve interest.

 

[Amaganset]

Extended DuPont

Profit Margin is ROA/(Sales/Total Assets) = .0969/2.23 = .0435
Debt Ratio = Debt/Equity = (Assets-Equity)/Equity = Assets/Equity -Equity/Equity= 1.692466- 1 = .69244

Not enough Information without the following assumptions:

With an assumed interest rate of 3%, Interest of .03 times Debt = $6.8MM
Debt=$226.67MM
Equity= $327.33 MM
Assets = $554 MM
Revenues = Rev/Assets * Assets = 2.23 * 554 = $1,235 MM
INC = .0435 * Rev = $53.7 MM
EBT = 53.7 / (1-Tax Rate) = 53.7 / .65 = $82.6 MM
EBIT = 82.6 + Interest = 82.6 + 6.8 MM = $89.4 MM
All other Costs = Rev - EBIT = #1,235 - $89.4 MM = $1,146 MM
Deprec and Amortization on an overage Timber company could be 10% of revenues, but there is not enough information to finish.

Joe P.

DuPont equation: The Rangoon Timber Company has the following relationships:

Sales/Total assets = 2.23; ROA = 9.69%; ROE = 16.4% $6.8 million interest expense, and the corporate tax rate is 35 percent. What was the company’s

depreciation and amortization expense? What are Rangoon’s profit margin and debt ratio? ***I am absolutely stumped on determining the depreciation and amortization expense! Any guidance on how to go about getting these amounts would be appreciated.