The DuPont equation shows that a company's ROE is determined by three factors:
A) net profit margin, total asset turnover, and the equity multiplier
B) operating profit margin, ROA, and the ROE
C) net profit margin, total asset turnover, the ROA
D) ROA, total assets turnover, and the equity multiplier

Question

Quizplus · Accepted Answer

The DuPont equation is expressed as ROE = Net profit margin x Total asset turnover x Equity multiplier. Therefore, the correct factors are net profit margin, total asset turnover, and the equity multiplier.

The DuPont Equation Shows That a Company's ROE Is Determined