Which one of the following accurately describes the three parts of the Du Pont identity?
A)operating efficiency, equity multiplier, and profitability ratio
B)financial leverage, operating efficiency, and profitability ratio
C)equity multiplier, profit margin, and total asset turnover
D)debt-equity ratio, capital intensity ratio, and profit margin
E)return on assets, profit margin, and equity multiplier

Question

Quizplus · Accepted Answer

The three parts of the Du Pont identity are the equity multiplier, profit margin, and total asset turnover. The equity multiplier measures the amount of debt used to finance assets, the profit margin measures the firm's ability to generate profits from sales, and the total asset turnover measures the efficiency of the firm's use of assets.

Which One of the Following Accurately Describes the Three Parts