
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Topic Video
Question
thumb_up100%

Transcribed Image Text:P3-45.
Compute the DuPont Disaggregation of ROE
Refer to the balance sheets and income statement below for Facebook Inc.
FACEBOOK INC.
Consolidated Statement of Income
For Year Ended December 31, $ millions
2018
Revenue..
$55,838
Costs and expenses
Cost of revenue
Research and development .
Marketing and sales.
General and administrative..
9,355
10,273
7,846
3,451
Total costs and expenses. .
30,925
Income from operations
Interest and other income (expense), net.
24,913
448
Income before provision for income taxes
Provision for income taxes.
25,361
3,249
Net income.
$22,112

Transcribed Image Text:FACEBOOK INC.
Consolidated Balance Sheet
At December 31, $ millions
2018
2017
Current assets
$ 8,079
33,632
Cash and cash equivalents.
$10,019
Marketable securities .
31,095
5,832
Accounts receivable, net.
Prepaid expenses and other current assets
7,587
1,779
1,020
Total current assets
50,480
24,683
48,563
13,721
Property and equipment, net
Intangible assets, net
Goodwill
1,294
18,301
1,884
18,221
2,135
Other assets.
2,576
Total assets
$97,334
$84,524
Current liabilities
$ 380
Accounts payable.
Partners payable.
Accrued expenses and other current liabilities
Deferred revenue and deposits.
$
820
541
390
5,509
2,892
147
98
Total current liabilities..
3,760
7,017
6,190
Other liabilities
6,417
Total liabilities.
13,207
10,177
Stockholders' equity
Common stock and additional paid-in capital.
42,906
40,584
Accumulated other comprehensive loss.
Retained earnings
(760)
41,981
(227)
33,990
Total stockholders' equity...
84,127
74,347
Total liabilities and stockholders' equity.
$97,334
$84,524
Required
a. Compute return on equity (ROE).
b. Apply the DuPont disaggregation into return on assets (ROA) and financial leverage.
c. Calculate the profitability and productivity components of ROA.
d. Confirm the full DuPont disaggregation: ROE = PM × AT × FL.
%3D
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps

Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- In 2018, Bax had revenues of 008.38M, cost of revenue of $173 50M, R&D expenses of $163 75M, and other expenses of $405 65M What is the net profe margin for the company? Ⓒa. (22.13%) Ob (12 13%) OC 44.35% Od 0122%3arrow_forwardPlease solve the question sub-division b alone.arrow_forwardForecast an Income Statement Following is the income statement for Medtronic PLC. Consolidated Statement of Income ($ millions) For Fiscal Year Ended April 26, 2019 Net sales $27,807 Costs and expenses Cost of products sold 8,331 Research and development expense 2,330 Selling, general, and administrative expense 9,480 Amortization of intangible assets 1,605 Restructuring charges, net 198 Certain litigation charges, net 166 Other operating expense, net 258 Operating profit 5,439 Other nonoperating income, net (373) Interest expense 1,314 Income before income taxes 4,498 Income tax provision 547 Net income 3,951 Net income loss attributable to noncontrolling interests (19) Net income attributable to Medtronic $3,932 Use the following assumptions to prepare a forecast of the company’s income statement for FY2020. Note: Complete the entire question in Excel using the following template: Excel Template. Format each answer to two decimal…arrow_forward
- Forecast Income Statement and Balance Sheet Following are the income statement and balance sheet for Medtronic PLC. Note: Complete the entire question using the following Excel template: Excel Template. Then enter the answers into the provided spaces below with two decimal places. Medtronic PLC Consolidated Statement of Income $ millions, For Fiscal Year Ended April 26, 2019 Net sales $30,557 Costs and expenses Cost of products sold 9,155 Research and development expense 979 Selling, general, and administrative expense 10,418 Amortization of intangible assets 1,764 Restructuring charges, net 83 Certain litigation charges, net 166 Other operating expense, net 258 Operating profit 7,734 Other nonoperating income, net (157) Interest expense 1,444 Income before income taxes 6,447 Income tax provision 547 Net income 5,900 Net income loss attributable to noncontrolling interests (19) Net income attributable to Medtronic $5,881…arrow_forwardklp.2arrow_forwardWhat is the impact on retained earnings each year?arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education


Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,

Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON

Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education

Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education