A company has return on assets of -8%. Return on sales are -6%. The leverage ratio is 2.0. Following DuPont analysis, what is return on equity?
A)-6%
B)-8%
C)-16%
D)-28%

Name: A company has return on assets of -8%. Return on sales are -6%. The leverage ratio is 2.0. Following DuPont analysis, what is return on equity? A)-6% B)-8% C)-16% D)-28%
Brand: Quizplus
Rating: 4.7 (44 reviews)

Question

Quizplus · Accepted Answer

Return on Equity (ROE) is calculated using the DuPont formula: ROE = Return on Assets (ROA) * Leverage Ratio. Here, ROE = -8% * 2.0 = -16%.

A Company Has Return on Assets of -8