Learning Objective
- Illustrate the application of the DuPont formula and cash-to-cash cycle in financial statement analysis.
Abstract
This case is designed to introduce students to financial ratio analysis, with an emphasis on the DuPont formula and the cash-to-cash cycle. Students examine Amazon and Walmart, two global retail giants that reported similar returns on equity (ROE) in fiscal year 2023. They decompose each company’s ROE into its three components: profit margin, asset turnover, and financial leverage. To gain deeper insight into the relative performance of the companies, particularly in terms of profitability and asset efficiency, students analyze Amazon’s segment data to isolate the impact of its cloud computing and retail businesses. In addition, they calculate the cash-to-cash cycle for both companies to explore more detailed aspects of their financial performance.
Appropriate for the Following Course(s)
Financial accounting, Financial statement analysis
*TEACHING NOTES AND SUPPLEMENTAL MATERIALS ARE ONLY AVAILABLE TO EDUCATORS WHO HOLD TEACHING POSITIONS AT ACADEMIC INSTITUTIONS.