The dupont identity can be totally defined by which one of the following?

a. return on equity, total asset turnover, and equity multiplier

b. equity multiplier and return on assets

c. profit margin and return on equity

d. total asset turnover, profit margin, and debt-equity ratio

e. equity multiplier, return on assets, and profit margin

Question

Business

Stevenson

11 November, 14:17

The dupont identity can be totally defined by which one of the following?

a. return on equity, total asset turnover, and equity multiplier

b. equity multiplier and return on assets

c. profit margin and return on equity

d. total asset turnover, profit margin, and debt-equity ratio

e. equity multiplier, return on assets, and profit margin

+4

Answers (1)

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Ian Guzman · Answer 1

The Dupont identity can be totally defined by equity multiplier and return on assets. The answer is letter B. The DuPont identity is a phrase that predicts a company's return of equity (ROE) and can be shown as a product of three values: profit, margin, total asset turnover and equity multiplier. ROE is also affected by operating efficiency, asset use efficiency and financial leverage.