CMA Study Group

CMA Part 2

  • 1.  CMA Part 2

    Posted 21 days ago
    Hello,

    Would someone be able to explain why they use the figures presented in the explanation? It's not clear whether those are arbitrary or not as a starting point to solve the problem.

    Thank you!!!

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  • 2.  RE: CMA Part 2

    Posted 21 days ago
    Hi Derricka,

    It is actually about DuPont formula:
    Return on Equity = Net Profit Margin × Total Asset Turnover × Financial Leverage Ratio

    ROE = 1.25 × 1.40 × (0.90 ÷ 1.40)
    ROE = 1.25 × 1.40 × 0.643
    ROE = 1.125

    Hope it helps!

    Regards,
    Marisa



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    MENGLUN LI
    Unemployed
    Boston MA
    United States
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  • 3.  RE: CMA Part 2

    Posted 20 days ago
    Ah! Thanks this is clear..i think i was over thinking it.

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    Derrick Durbin
    Controller
    Graham NC
    United States
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  • 4.  RE: CMA Part 2

    Posted 21 days ago
    You need to assume or take some imaginable value to solve this question and If u look into solution its clearly mentioned that everything from previous year is assumed.

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    Roshan Chhetri
    Accountant
    Siliguri
    India
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  • 5.  RE: CMA Part 2

    Posted 20 days ago
    Hello,

    Need to look at the study material. looks some information is provided which is not visible from the question you gave. Seeing the kind of numbers used, there must be some reference provided.

    Thanks,
    Kiran





  • 6.  RE: CMA Part 2

    Posted 20 days ago
    I was thinking the same thing but see the remark from Menglun Li. It makes more sense now!

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    Derrick Durbin
    Controller
    Graham NC
    United States
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