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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