The three summary ratios basic to the DuPont system of analysis are
A) net profit margin, total asset turnover, and return on equity.
B) net profit margin, total asset turnover, and equity multiplier.
C) net profit margin, financial leverage multiplier, and return on equity.
D) net profit margin, total asset turnover, and return on investment.

Question

Quizplus · Accepted Answer

The three summary ratios basic to the DuPont system of analysis are net profit margin, total asset turnover, and equity multiplier. This combination helps to evaluate how efficiently a company is using its assets and how much profit it is generating per dollar of sales. The equity multiplier shows how much of the assets are funded by debt and helps to evaluate the level of financial leverage used by the company.

The Three Summary Ratios Basic to the DuPont System of Analysis