Following the DuPont analysis model, the higher the leverage ratio, the higher the:
A)net profit margin ratio.
B)return on assets.
C)return on sales.
D)return on stockholders' equity.

Question

Quizplus · Accepted Answer

The DuPont analysis model shows that a higher leverage ratio increases the return on stockholders' equity by amplifying the effects of return on assets.

Following the DuPont Analysis Model, the Higher the Leverage Ratio