The DuPont Identity expresses the firm's ROE in terms of:
A)profitability,asset efficiency,and leverage.
B)valuation,leverage,and interest coverage.
C)profitability,margins,and valuation.
D)equity,assets,and liabilities.

Question

Quizplus · Accepted Answer

The DuPont Identity breaks down ROE into three components: profitability (measured by net profit margin), asset efficiency (measured by total asset turnover), and leverage (measured by the equity multiplier). Therefore, choice A is correct as it includes all three components of the DuPont Identity. Choices B, C, and D do not accurately reflect the components of the DuPont Identity.

The DuPont Identity Expresses the Firm's ROE in Terms Of