________ is used by financial managers as a structure for dissecting the firm's financial statements to assess its financial condition.
A) Statement of cash flows
B) The DuPont system of analysis
C) A common-size income statement
D) Cross-sectional analysis

Question

Quizplus · Accepted Answer

The DuPont system of analysis is a widely used framework for financial analysis that helps in understanding various financial ratios and their interrelationships. This system disaggregates return on equity (ROE) into different components, such as profitability, operating efficiency, and leverage, to identify the key drivers of a firm's financial performance. By analyzing these drivers, financial managers can identify the areas that require improvement and develop strategies to enhance the firm's profitability and value. The other options listed, such as the statement of cash flows, common-size income statement, and cross-sectional analysis, provide important financial information but do not specifically address the structure for dissecting the firm's financial statements.

________ Is Used by Financial Managers as a Structure for Dissecting