The formula for the Du Pont model is
A) (income ÷ assets) x (income ÷ sales).
B) (income ÷ revenues) x (revenues ÷ assets).
C) (income ÷ revenues) x (revenues ÷ stockholders' equity).
D) (revenues ÷ income) x (income ÷ assets).
E) (income ÷ stockholders' equity) x (stockholders' equity ÷ net assets).

Question

Quizplus · Accepted Answer

The Du Pont model is a performance measurement formula that calculates a company's return on equity (ROE) by multiplying its profit margin (income ÷ revenues) by its asset turnover (revenues ÷ assets). This formula is designed to provide insight into the components driving a company's ROE.

The Formula for the Du Pont Model Is