Company Analyzer
Review five reported years of the case company: growth, margins, the DuPont split of ROE, working capital, capital investment and capital structure.
Learning focus: ROE alone doesn't say how a company earns its return: DuPont splits it into margin, turnover and leverage, and each part has a different cause and a different risk.
This tool reads the reported years, so the scenario and the rates above don't change its figures.
Changes here carry to the other valuation tools. Your case stays in this browser. Sign in to save it to your account.
Year-end balances: every balance sheet figure on this page is the one at the end of the year, so Y10 uses the Y10 year-end.
In Y10, Ostrell Industries earned an ROE of 16.96%: a net margin of 8.89%, asset turnover of 1.048× and leverage of 1.822×. Against Y9, ROE rose 0.17 points. Asset turnover moved most, from 1.040× to 1.048×.
Return on equity and DuPont
ROE 16.96% = Net margin 8.89% × Asset turnover 1.048× × Leverage 1.822×
ROE 16.96% = Tax burden 0.760 × Interest burden 0.889 × EBIT margin 13.15% × Asset turnover 1.048× × Leverage 1.822×
Growth and margins
The case gives no volume, price or segment figures for Ostrell Industries, so growth is shown in total. What moves its revenue: Demand follows water infrastructure budgets and plant maintenance, so it is steadier than most industrial markets. Replacement parts and service give recurring revenue from equipment already installed.
Working capital
Capital investment
Capital structure
| Y6 | Y7 | Y8 | Y9 | Y10 | |
|---|---|---|---|---|---|
| Return on equity and DuPont | |||||
| ROE | 16.63% | 16.70% | 16.12% | 16.79% | 16.96% |
| ROA | 9.42% | 9.39% | 8.97% | 9.28% | 9.31% |
| Asset turnover | 1.038× | 1.039× | 1.034× | 1.040× | 1.048× |
| Leverage | 1.766× | 1.777× | 1.797× | 1.810× | 1.822× |
| Tax burden | 0.760 | 0.760 | 0.760 | 0.760 | 0.760 |
| Interest burden | 0.897 | 0.896 | 0.890 | 0.891 | 0.889 |
| DuPont product (three steps) | 16.63% | 16.70% | 16.12% | 16.79% | 16.96% |
| DuPont product (five steps) | 16.63% | 16.70% | 16.12% | 16.79% | 16.96% |
| Growth and margins | |||||
| Revenue | $2,457.2m | $2,550.0m | $2,623.0m | $2,735.3m | $2,857.0m |
| Revenue growth | — | 3.78% | 2.86% | 4.28% | 4.45% |
| Revenue CAGR, Y6 to Y10 | 3.84% | 3.84% | 3.84% | 3.84% | 3.84% |
| Gross margin | 36.19% | 36.16% | 35.76% | 36.07% | 36.02% |
| EBIT margin | 13.31% | 13.28% | 12.84% | 13.17% | 13.15% |
| Net margin | 9.08% | 9.04% | 8.68% | 8.92% | 8.89% |
| Working capital | |||||
| Days of receivables | 55.0 days | 55.0 days | 55.0 days | 55.0 days | 55.0 days |
| Days of inventory | 70.0 days | 70.0 days | 70.0 days | 70.0 days | 70.0 days |
| Days of payables | 40.0 days | 40.0 days | 40.0 days | 40.0 days | 40.0 days |
| Cash conversion cycle | 85.0 days | 85.0 days | 85.0 days | 85.0 days | 85.0 days |
| Capital investment | |||||
| Capex to revenue | 6.20% | 6.20% | 6.20% | 6.20% | 6.20% |
| Capex to depreciation | 1.60× | 1.60× | 1.58× | 1.59× | 1.60× |
| Capital structure | |||||
| Debt to equity | 0.64× | 0.65× | 0.67× | 0.68× | 0.69× |
| EBITDA | $422.4m | $437.7m | $439.5m | $466.9m | $486.4m |
| Net debt | $705.4m | $743.3m | $788.1m | $832.6m | $879.2m |
| Net debt to EBITDA | 1.67× | 1.70× | 1.79× | 1.78× | 1.81× |
| Interest cover | 9.73× | 9.59× | 9.05× | 9.14× | 9.03× |
The chosen year is in bold. A dash means the ratio has no value that year.