Under the DuPont system, the return on assets is equal to:
A)the product of the gross profit margin and inventory turnover.
B)the sum of the debt-equity ratio and the return on sales.
C)the product of the return on sales and total asset turnover.
D)the product of the return on sales, total asset turnover, and equity multiplier.
E)None of the above

Question

Quizplus · Accepted Answer

According to the DuPont system, the return on assets (ROA) is equal to the product of the return on sales (ROS) and the total asset turnover (TAT). Therefore, the correct choice is C, as it corresponds to this formula. The other choices do not provide the correct calculation for ROA under the DuPont system.

Under the DuPont System, the Return on Assets Is Equal