The net income is $100,sales are $200,total assets are $500,and total equity is $300.According to the DuPont method of financial ratio analysis,ROE is about 33.33%.

Question

Quizplus · Accepted Answer

The DuPont method of financial ratio analysis states that ROE (Return on Equity) is equal to Net Income/Sales multiplied by Sales/Total Assets multiplied by Total Assets/Total Equity. 
ROE = (Net Income/Sales) * (Sales/Total Assets) * (Total Assets/Total Equity) 
Plugging in the given values, ROE = ($100/$200) * ($200/$500) * ($500/$300) = 0.1667*0.4*1.6667 = 0.1111 = 11.11%
Therefore, the statement in the question is False. However, if we assume that the net income is $200 instead of $100, then ROE would indeed be approximately 33.33%.

The Net Income Is $100,sales Are $200,total Assets Are $500,and