The DuPont analysis disaggregates return on equity into profitability, productivity, and leverage components.

Question

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DuPont analysis breaks down Return on Equity (ROE) into three components: profitability (measured by net profit margin), asset efficiency or productivity (measured by asset turnover), and financial leverage (measured by the equity multiplier), to provide a detailed understanding of what is driving a company's ROE.

The DuPont Analysis Disaggregates Return on Equity into Profitability, Productivity