The Du Pont identity is deﬁned as the:
A) Proﬁt margin times the total asset turnover times the equity multiplier.
B) Proﬁt margin times the inventory turnover times the equity multiplier.
C) Return on equity times the proﬁt margin times the total asset turnover.
D) Return on equity times the total asset turnover times the equity multiplier.
E) Return on assets times the total asset turnover times the proﬁt margin.

Question

Quizplus · Accepted Answer

The Du Pont identity breaks down return on equity (ROE) into three components: profit margin, total asset turnover, and equity multiplier.

The Du Pont Identity Is Deﬁned as The