Refer to the figure above. Using the DuPont method, return on assets (investment) for Tew is approximately
A) 125%
B) 34.1%
C) 293.0%
D) None of these.

Question

Quizplus · Accepted Answer

Using the DuPont method, the return on assets can be calculated by multiplying the profit margin (net income/sales) and asset turnover (sales/assets). 
Profit margin = $150,000/$1,200,000 = 0.125 or 12.5%
Asset turnover = $1,200,000/$4,500,000 = 0.2667 or 26.67%
Return on assets = 0.125 x 0.2667 = 0.033375 or 3.3375 or approximately 3.41% (rounded to one decimal place)
Therefore, the closest choice is B, 34.1%.

Refer to the Figure Above