关于杜邦分析法的外文翻译docx.docx
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.
外文资料及中文译文
作者姓名***
专业财务管理
指导教师姓名***
专业技术职务副教授
.
.
外文资料
FIVEWAYSTOIMPROVERETURNONEQUITY
TheDuPontModel:
ABriefHistory
The
use
of
financial
ratios
by
financial
analysts,
lenders,
academic
researchers,andsmallbusinessownershasbeenwidelyacknowlegedin
the
literature.
(See,
for
example,
Osteryoung
&
Constand
(1992),
Devine&Seaton(1995),orBurson(1998)
TheconceptsofReturnon
Assets(ROA
hereafter)
and
Returnon
Equity
(ROEhereafter)
are
important
for
understanding
the
profitability
of
abusinessenterprise.
Specifically,a“return
on”ratio
illustrates
the
relationship
between
profitsandtheinvestmentneededtogeneratethoseprofits.
However,
theseconceptsareoften
“toofarremovedfromnormalactivities
”
be
easily
understood
and
useful
to
many
managers
or
small
business
owners.
(SlaterandOlson,1996)
In1918,fouryearsafterhewashiredbytheDuPontCorporationtowork
initstreasurydepartment,electricalengineerF.DonaldsonBrownwas
giventhetaskofuntanglingthefinancesofacompanyofwhichDuPont
hadjustpurchased23percentofitsstock.
(ThiscompanywasGeneral
Motors!
)
Brown
recognized
amathematical
relationship
thatexisted
between
two
commonly
computed
ratios,
namely
net
profit
margin
(obviouslyaprofitabilitymeasure)andtotalassetturnover(anefficiency
measure),andROA.
Theproductofthenetprofitmarginandtotalasset
.
.
turnover
equals
ROA,
andthis
wasthe
original
Du
Pont
model,
as
illustratedinEquation1below.
Eq.1:
(netincome/sales)x(sales/totalassets)=(netincome/
totalassets)i.e.ROA
AtthispointintimemaximizingROAwasacommoncorporategoal
and
the
realization
that
ROA
was
impactedbyboth
profitability
and
efficiencyledtothedevelopmentofasystemofplanningandcontrolfor
alloperatingdecisionswithinafirm.
Thisbecamethedominantformof
financialanalysisuntilthe1970s.
(Blumenthal,1998)
Inthe1970sthegenerallyacceptedgoaloffinancialmanagement
became
“maximizingthewealthofthefirm
’sowners
”(Gitman,1998)
and
focus
shifted
from
ROA
to
ROE.
This
led
to
the
first
major
modificationoftheoriginalDuPontmodel.
Inadditiontoprofitability
andefficiency,thewayinwhichafirmfinanceditsactivities,i.e.itsuseof
“leverage
”became
a
third
area
ofattention
for
financial
managers.
Thenewratioofinterestwascalledtheequitymultiplier,whichis(total
assets/equity).
ThemodifiedDuPontmodelisshowninEquations1
and2below.
Eq.2:
ROAx(totalassets/equity)=ROE
Eq.3:
(net
income
/sales)
x(sales/
total
assets)
x(total
assets/
equity)=ROE
ThemodifiedDuPontmodelbecameastandardinallfinancial
.
.
management
textbooks
and
a
stapleof
introductory
and
advanced
coursesalikeasstudentsreadstatementssuchas:
“Ultimately,themost
important,or
“bottomline
”accountingratioistheratioofnetincome
to
common
equity
(ROE).
”(Brigham
and
Houston
2001)
The
modifiedmodelwasapowerfultooltoillustratetheinterconnectedness
of
a
firm
’incomes
statement
anditsbalancesheet,and
to
develop
straight-forwardstrategiesforimprovingthefirm
’sROE.
More
recently,
Hawawini
and
Viallet
(1999)
offered
yet
another
modificationtotheDuPont
model.
Thismodificationresultedinfivedifferentratiosthatcombine
to
form
ROE.
Intheir
modification
they
acknowlege
that
thefinancial
statements
firms
preparefor
their
annualreports
(which
are
of
most
importance
to
creditorsand
tax
collectors)
are
not
always
useful
tomanagers
making
operating
and
financialdecisions.
(Brigham
and
Houston,
p.52)
Theyrestructured
the
traditional
balance
sheet
into
a“managerial
balance
sheet
”which
is
“amoreappropriat
e
tool
for
assessing
the
contribution
ofoperating
decisions
to
the
firm
’s
financialperformance.
(Hawawini”
and
Viallet,
p.68)This
restructured
balance
sheet
uses
the
conceptof
“investedcapital
”in
place
of
total
assets,
andthe
concept
of
“capital
employed
”in
place
oftotal
liabilities
and
owner’sequity
found
on
thetraditional
balance
sheet.
The
primary
differenceis
in
the
treatment
of
the
short-term
.
.
“workingcapital”accountsThe.managerialbalancesheetusesanet
figurecalled
“workingcapitalrequirement
”(determinedas:
[accounts
receivable
+inventories
+
prepaid
expenses]
–[accounts
payable
+
accruedexpenses])asapartofinvestedcapital.
Theseaccountsthen
individuallydropoutofthemanagerialbalancesheet.
Amoredetailed
explanationofthemanagerialbalancesheetisbeyondthescopeofthis
paper,
but
will
bepartially
illustrated
in
an
example.
The“really
”
modifiedDuPontmodelisshownbelowinEquation4.
Eq.4:
(EBIT/sales)x(sales/investedcapital)x(EBT/EBIT)x(invested
capital/equity)x(EAT/EBT)=ROE
(Where:
invested
capital
=
cash+working
capital
requirement
+
net
fixedassets)
This
“really
modified”
model
still
maintains
the
importance
of
the
impact
of
operating
decisions
(i.e.
profitability
and
efficiency)
and
financingdecisions(leverage)uponROE,butusesatotaloffiveratiosto
uncover
what
drives
ROE
and
give
insight
to
how
toimprove
this
importantratio.
The
firm
’soperating
decisions
are
those
that
involve
the
acquisition
and
disposal
of
fixed
assets
and
the
management
of
the
firm
’s
operating
assets
(mostly
inventories
and
accounts
receivable)
and
operatingliabilities(accountspayableandaccruals).
Thesearecaptured
inthefirst
two
ratios
of
the
“really
modified”
Du
Pontmodel.
These
.
.
are:
1.operatingprofitmargin:
(EarningsBeforeInterest&TaxesorEBIT/
sales)
2.capitalturnover:
(sales/investedcapital)
Thefirm’sfinancingdecisionsarethosethatdeterminethemixofdebt
andequityusedtofundthefirm’soperatingdecisions.Theseare
capturedinthethirdandfourthratiosofthe“really”modifiedmod
Theseare:
3.financialcostratio:
(EarningsBeforeTaxesorEBT/EBIT)
4.financialstructureratio:
(investedcapital/equity)
Thefinaldeterminantofafirm’sROEistheincidenceofbusiness
taxation.Thehigherthetax
rateappliedtoafirm’sEBT,theloweritsROEThis.iscapturedinthe
fifthratioofthe“really”
modifiedmodel.
5.taxeffectratio:
(EarningsAfterTaxesorEAT/EBT)
TherelationshipthattiesthesefiveratiostogetheristhatROEisequal
totheircombinedproduct.(SeeEquation4.)
ExampleofApplyingthe“Really”ModifiedDuPontModel
Toillustratehowthemodelworks,considertheincomestatementand
balancesheetforthefictitioussmallfirmofHerrera&Company,LLC.
.
.
IncomeStatement
NetSales⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯$766,990
..
CostofGoodsSold
⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯(560,000)
..
Selling,General,&AdministrativeExpenses
(143,342)⋯⋯⋯⋯⋯⋯.
DepreciationExpense
⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯(24,000)
..
EarningsBeforeInterest&Taxes
⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯39,648
$
InterestExpense
⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯(12,447)
...
EarningsBeforeTaxes
⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯27,201
.$
Taxes⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯(8,000)
EarningsAfterTaxes(netprofit)⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯19,201.$
BalanceSheet
Cash⋯⋯⋯⋯⋯⋯⋯⋯⋯40,000.Notes$Payable
⋯⋯⋯⋯⋯⋯⋯58,000
$
Pre-paidExpenses⋯⋯⋯...
12,000
Accounts
Payable
⋯⋯⋯⋯⋯..
205,000
Accounts
Receivable⋯⋯⋯
185,000
Accrued
Expenses
⋯⋯⋯⋯⋯.
46,000
Inventory
⋯⋯⋯⋯⋯⋯⋯200,000..
Current
Liabilities
⋯⋯⋯⋯⋯.
$309,000
CurrentAssets
⋯⋯⋯⋯⋯
.$437,000-TermLongDebt
Land/Buildings
⋯⋯⋯⋯⋯
160,000
Mortgage⋯⋯⋯⋯⋯⋯⋯⋯.
104,300
.
.
Equipment
⋯⋯⋯⋯⋯⋯⋯
89,000
8-YearNote
⋯⋯⋯⋯⋯⋯⋯
63,000
Less:
Acc.
Depreciation⋯...
(24,000)
Owner’sEquity
⋯⋯⋯⋯⋯⋯..
185,700
NetFixed
Assets⋯⋯⋯⋯$225,000..
TotalLiabilities&
Equity⋯⋯..
$662,000
TotalAssets
⋯⋯⋯⋯⋯⋯
.$662,000
ComputationofROE
1.OperatingProfitMargin=$39,648/$766,990=.0517
2.CapitalTurnover=$766,990/$411,000*=1.8662
3.FinancialCostRatio=$27,201/$39,648=.6861
4.FinancialStructureRatio=$411,000/$185,700=2.2132
5.TaxEffectRatio=$19,201/$27,201=.7059
ROE=.0517x1.8662x.6861x2.2132x.7059=.1034**or10.34%
*Invested
Capital
=
Cash($40,000)
+
Working
Capital
Requirement
[$185,000+$200,000+$12,000]
–
[$205,000
+
$46,000]
(or
$146,000)
+
NetFixed
Assets
($225,000)=
$411,000
**Notethat
this
is
the
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