The DuPont system merges the income statement and balance sheet into two summary measures of profitability, ________.
A) net profit margin, and return on total assets
B) net profit margin, and return on equity
C) return on total assets, and return on common equity
D) net profit margin, and price/earning ratio

Question

Quizplus · Accepted Answer

The DuPont system uses the return on total assets and return on common equity as the two summary measures of profitability, which are derived from both the income statement and balance sheet. Option A and D are incorrect as they only include one measure of profitability each, and option B includes return on equity, but not return on total assets.

The DuPont System Merges the Income Statement and Balance Sheet