BFIN 367
Follow the numbers. Find the story.
Connecting the financial statements...
Corporate Detective Game: Identify 6 Mystery Companies Using ROE, ROA, Margin, Turnover, and Leverage
6 companies with different business models and DuPont drivers.
Analyze Profit Margin, Asset Turnover, derived ROA, and the Equity Multiplier for each mystery company. Use the calibration guide to decide what is thin, moderate, or high, then match each profile to the real business.
Points System: You start with 100 points. Each time you reveal a hint, 10 points are deducted. Can you solve it with a perfect score?
| Ratio | Lower band | Middle band | Upper band | How to read it |
|---|---|---|---|---|
| Net Profit Margin | < 5% = thin | 5% to 15% = moderate | > 15% = high | Profit retained from each sales dollar. |
| Asset Turnover | < 0.75x = low | 0.75x to 1.50x = moderate | > 1.50x = high | Sales generated by each dollar of average assets. |
| ROA | < 5% = low | 5% to 10% = moderate | > 10% = high | Asset return signal before examining leverage. |
| Equity Multiplier | < 2.0x = lower leverage | 2.0x to 3.0x = moderate | > 3.0x = high | Nonfinancial-company screening band only. |
| ROE | < 10% = low | 10% to 20% = moderate | > 20% = high | Headline equity return. Check ROA and the equity denominator before interpreting. |
Bank exception: a bank can normally operate with an equity multiplier well above 3x because deposits are liabilities used to fund earning assets. For banks, compare leverage and ROE with banking peers and regulatory capital measures rather than applying the nonfinancial cutoff mechanically. If equity is negative or unusually compressed by repurchases, conventional ROE can also become misleading.
✓ You've made all 6 guesses!