In the DuPont system of analysis, the return on equity is equal to ________.
A) (net profit margin) × (total asset turnover)
B) (stockholders' equity) × (financial leverage multiplier)
C) (return on total assets) × (financial leverage multiplier)
D) (return on total assets) × (total asset turnover)

Question

Quizplus · Accepted Answer

The DuPont system of analysis formula is ROE = (Net profit margin) x (Total asset turnover) x (Financial leverage multiplier), which is same as the choice C: (Return on total assets) x (Financial leverage multiplier).

In the DuPont System of Analysis, the Return on Equity