The DuPont method return on assets uses two component ratios.What are they?
A)Inventory turnover * gross profit margin
B)Times interest earned * debt ratio
C)Return on equity * dividend payout
D)Net profit margin * total asset turnover
E)Return on investment * total investment turnover

Question

Quizplus · Accepted Answer

The DuPont method return on assets uses the net profit margin and total asset turnover ratios. The formula is (net profit margin) x (total asset turnover) = return on assets. Therefore, option D is the best choice as it includes both components of the DuPont method.

The DuPont Method Return on Assets Uses Two Component Ratios