Which one of these identifies the relationship between the return on assets and the return on equity?
A) Profit margin
B) Profitability determinant
C) Balance sheet multiplier
D) DuPont identity
E) Debt-equity ratio

Question

Quizplus · Accepted Answer

The DuPont identity is a method of breaking down return on equity (ROE) into its component parts, which are the return on assets (ROA) and the equity multiplier. The equation is ROE = ROA x Equity Multiplier. Therefore, the DuPont identity directly relates the return on assets to the return on equity.

Which One of These Identifies the Relationship Between the Return