Which of the statements below is TRUE?
A)DuPont analysis shows that ROE is Net Income
Sales × $\frac {\text {Sales }}{\text { Total Equity}}$ × $\frac {\text {Total Equity }}{\text { Total Assets}}$ .
B)DuPont analysis shows that ROE is $\frac {\text {Net Income }}{\text { Sales}}$ × $\frac{\text { Sales}} {\text {Net Income }}$ × $\frac {\text { Total Assets}}{\text {Total Equity }}$ .
C)DuPont analysis shows that ROE is $\frac {\text {Net Income}}{\text {Total Assets }}$ × $\frac {\text {Total Assets }}{\text {Net Income}}$ × $\frac{\text {Total Assets }}{\text { Sales}}$ .
D)DuPont analysis shows that ROE is $\frac{\text {Net Income }}{\text {Sales }}$ × $\frac{\text {Sales }}{\text { Total Assets}}$ × $\frac{\text {Total Assets }}{\text { Total Equity}}$

Question

Which of the statements below is TRUE?
A)DuPont analysis shows that ROE is Net Income
Sales × $\frac {\text {Sales }}{\text { Total Equity}}$ × $\frac {\text {Total Equity }}{\text { Total Assets}}$ .
B)DuPont analysis shows that ROE is $\frac {\text {Net Income }}{\text { Sales}}$ × $\frac{\text { Sales}} {\text {Net Income }}$ × $\frac {\text { Total Assets}}{\text {Total Equity }}$ .
C)DuPont analysis shows that ROE is $\frac {\text {Net Income}}{\text {Total Assets }}$ × $\frac {\text {Total Assets }}{\text {Net Income}}$ × $\frac{\text {Total Assets }}{\text {  Sales}}$ .
D)DuPont analysis shows that ROE is $\frac{\text {Net Income }}{\text {Sales }}$ × $\frac{\text {Sales }}{\text { Total Assets}}$ × $\frac{\text {Total Assets }}{\text { Total Equity}}$

Quizplus · Accepted Answer

DuPont analysis breaks down Return on Equity (ROE) into three components: Profit Margin ($\frac{\text{Net Income}}{\text{Sales}}$), Asset Turnover ($\frac{\text{Sales}}{\text{Total Assets}}$), and Financial Leverage ($\frac{\text{Total Assets}}{\text{Total Equity}}$). This formula shows how efficiently a company is using its assets to generate profit and how effectively it is leveraging its debt.

Which of the Statements Below Is TRUE? A)DuPont Analysis Shows Sales Total Equity\frac {\text {Sales }}{\text { Total Equity}} Total EquitySales ​

Which of the Statements Below Is TRUE?
A)DuPont Analysis Shows $\frac {\text {Sales }}{\text { Total Equity}}$