Questions
FA25-BL-BUS-F307-1134
Single choice
The relationship between the return on assets and the return on equity is identified by the:
Options
A.profitability determinant.
B.debt-equity ratio.
C.net profit margin.
D.DuPont identity.
E.balance sheet multiplier.
View Explanation
Verified Answer
Please login to view
Step-by-Step Analysis
To start, let's consider what the question is asking: the connection between return on assets (ROA) and return on equity (ROE).
Option 1: profitability determinant. While profitability drives ROA and ROE, this label is vague and does not specify the precise relationship between ROA and ROE. It misses the explicit linkage provided in standard financial decomposition.
Option 2: debt-equ......Login to view full explanationLog in for full answers
We've collected over 50,000 authentic exam questions and detailed explanations from around the globe. Log in now and get instant access to the answers!
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
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?
An analyst has provided the following data for SVD Corporation: Return On Equity (ROE = Net Profit Margin x Total Asset Turnover x Equity Multiplier (Leverage) 2023 5.92% 3.33% 1.11 1.6 2022 1.66% 1.11% 0.95 1.58 2021 1.62% 1.13% 0.93 1.54 2020 -0.62% -0.47% 0.84 1.6 Over the 4-year period, the company’s leverage factor was relatively [ Select ] . The primary reason for the increase in ROE is the decrease in profitability measured by return on assets (ROA) [ Select ] . The increase in ROE is a function of improving [ Select ] and improving [ Select ] .
More Practical Tools for Students Powered by AI Study Helper
Making Your Study Simpler
Join us and instantly unlock extensive past papers & exclusive solutions to get a head start on your studies!