Question
In: Finance
how you would use the strategic profit model to analyze the company’s performance ratio.
how you would use the strategic profit model to analyze the company’s performance ratio.
Solutions
Expert Solution
Hello,
What is Strategic Profit model?
Strategic profit model is also known as Du Pont Model.
It can be measured by Profitability, asset efficiency and Financial
leverage ratio measured by(profit margin, asset turnover &
equity multiplier) respectively.
Profitability ratio shows the how the company is
earn profit by investing the amount of shareholder
Financial Leverage shows that how the company is
uses debt as compared to equity (in general if the debt to
equity ratio is more than 2 it is not good for company).
Asset turnover shows that how many sales is generated by
company by investing the amount of assets.
All these ratio shows the company performance. whether company is
in a good position or not, whether the company is generating profit
or not.
I hope this clear your doubt.
Feel free to comment if you still have any query or need something else. I'll help asap.
Do give a thumbs up if you find this helpful.
jeff jeffy answered 2 weeks agoRelated Solutions
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