DuPont Ratio

DuPont Ratio = Net Income × Sales × Total Assets

Sales Total Assets Common equity
2019
DuPont Ratio = 32,279 × 310,785 × 265,967
310,785 265,967
2018
DuPont Ratio = 30, 533 × 286,378 × 238, 504
286,378 238, 504

Ratio 2019 2018

Profit Margin 10% 11%
Total Asset Turnover 1.17 1.20
Financial Leverage
DuPont Ratio 0.23 0.23

The company’s sales are decreasing as evidenced by its lower profit margin of
10% in 2019 compared to 11% of the previous year. The data also shows that San
Miguel Food and beverage has a difficult time on turning over a large amount of sales
as its asset turnover decreases to 1.17 from the previous year's 1.20. The amount of
equity multiplier in 2019 had increased to 1.95 which has shown to be the effect from
the increase in borrowed capital. The increase in the financial leverage makes the
company at risk as the stock might deserve more of a discount despite the consistency
of the ROE. This is a bad sign for the company as it shows two negative signs and the
reason it stayed the same was an increase in its financial leverage.

Reference:
San Miguel Food and Beverage Inc. (2020, June 30). [amend-2]annual report. PSE EDGE
Portal. https://edge.pse.com.ph/openDiscViewer.do?
edge_no=2f185aa7449195b00de8473cebbd6407