Question 19 (1 point) The DuPont identity breaks down return on equity (ROE) into the following components: profit margin, total asset turnover, and equity multiplier profit margin, total debt ratio, and equity multiplier return on assets (ROA), profit margin, and equity multiplier profit margin, total asset turnover, and total debt ratio current ratio, total asset turnover, and equity multiplier Solution ROE=Net income/Total equity Profit margin=Net income/Sales Total asset turnover=Sales/Total assets Equirty multiplier=Total assets/Total equity Hence ROE=Profit margin*Total asset turnover*Equity multiplier Hence the correct option is A..

1. Question 19 (1 point) The DuPont identity breaks down return on equity (ROE) into the
following components: profit margin, total asset turnover, and equity multiplier profit margin,
total debt ratio, and equity multiplier return on assets (ROA), profit margin, and equity multiplier
profit margin, total asset turnover, and total debt ratio current ratio, total asset turnover, and
equity multiplier
Solution
ROE=Net income/Total equity
Profit margin=Net income/Sales
Total asset turnover=Sales/Total assets
Equirty multiplier=Total assets/Total equity
Hence ROE=Profit margin*Total asset turnover*Equity multiplier
Hence the correct option is A.