Question
The DuPont approach breaks down the earnings power on the shareholders' book value (ROE) as
The correct answer is
Net Profit Margin × Total Assets Turnover × Equity Multiplier
The three-factor DuPont identity is \(ROE=\frac{\text{Net income}}{\text{Sales}}\times\frac{\text{Sales}}{\text{Total assets}}\times\frac{\text{Total assets}}{\text{Equity}}\). These factors are net profit margin, total-assets turnover, and the equity multiplier; cancelling sales and assets gives net income divided by equity.
Was this answer helpful?
Important Questions from Miscellaneous
- List-I with List-II:
List-I
(Relief Materials)List-II
(Color Code)A. Shelter I. Yellow B. Clothes II. Khaki C. Food III. Red D. Medicine IV. Brown
Choose the correct answer from the options given below: - What was a key reform introduced by the Waqf (Amendment) Act, 2025?
Which of the following is NOT a state function or state variable in a thermodynamic system?
- What is the full form for "BPL" in Socio-economic aspects?
- In October 2024, which of the following companies was awarded the contract for design, manufacturing and commissioning of two high-speed trainsets by Integral Coach Factory (ICF) to be used in India's first bullet train between Mumbai and Ahmedabad?
Need Expert Advice?
