Use the following balance sheets and income statements for Valero Energy Corporation to answer the requirements.
Required:
a. Compute Valero's return on equity (ROE) for 2016 and 2015. Valero Energy stockholders' equity in 2014 was $20,677 million.
b. Compute the profit margin (PM), asset turnover (AT), and financial leverage (FL) components of the basic DuPont model. Show that ROE = PM × AT × FL for 2016. Total assets were $45,550 million in 2014. Which component(s) explain the year over year change in Valero's ROE?
c. Compute adjusted return on assets (ROA) for 2016 and 2015. Assume a tax rate of 37% for both years.

Question

Use the following balance sheets and income statements for Valero Energy Corporation to answer the requirements.
   Required: 
a. Compute Valero's return on equity (ROE) for 2016 and 2015. Valero Energy stockholders' equity in 2014 was $20,677 million.
b. Compute the profit margin (PM), asset turnover (AT), and financial leverage (FL) components of the basic DuPont model. Show that ROE = PM × AT × FL for 2016. Total assets were $45,550 million in 2014. Which component(s) explain the year over year change in Valero's ROE?
c. Compute adjusted return on assets (ROA) for 2016 and 2015. Assume a tax rate of 37% for both years.

Quizplus · Accepted Answer

The Answer of Use the following balance sheets and income statements for Valero Energy Corporation to answer the requirements.
   Required: 
a. Compute Valero's return on equity (ROE) for 2016 and 2015. Valero Energy stockholders' equity in 2014 was $20,677 million.
b. Compute the profit margin (PM), asset turnover (AT), and financial leverage (FL) components of the basic DuPont model. Show that ROE = PM × AT × FL for 2016. Total assets were $45,550 million in 2014. Which component(s) explain the year over year change in Valero's ROE?
c. Compute adjusted return on assets (ROA) for 2016 and 2015. Assume a tax rate of 37% for both years.

Use the Following Balance Sheets and Income Statements for Valero