Questions
ACCT10001_2025_SM1 Tutorial Preparation Quiz Topic 7 & 8
Single choice
The ratio, return on assets, is the product of the:
Options
A.profit margin and the asset turnover ratio.
B.debt ratio and the equity ratio.
C.asset turnover ratio and the current ratio.
D.asset turnover ratio and the days inventory ratio.
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Step-by-Step Analysis
The question asks about the composition of the return on assets (ROA) ratio.
Option 1: 'profit margin and the asset turnover ratio.' This is the correct relationship for ROA, since ROA can be expressed as ROA = (Net income / Sales) × (Sales / Assets) = ......Login to view full explanationLog in for full answers
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Similar Questions
Company P and Company Q operate in different industries. Company P has an ROE of 18%, while Company Q has an ROE of 12%. Their DuPont components are: Company P: Net profit margin = 3%, Asset turnover = 3.0, Equity multiplier = 2.0 Company Q: Net profit margin = 12%, Asset turnover = 0.5, Equity multiplier = 2.0 Based on DuPont analysis, which of the following statements are correct? I. Company P's higher ROE is driven by superior asset utilization efficiency II. Company Q is more operationally profitable on each dollar of sales III. Both companies have identical capital structures IV. Company P likely operates in a high-volume, low-margin industry such as retail
The relationship between the return on assets and the return on equity is identified by the:
A company has an ROE of 12%, a leverage multiplier of 0.65, and a total asset turnover of 0.88. What is the company’s net margin?
Which one of the following is not a factor impacting the DuPont decomposition?
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