The DuPont system of analysis allows firms to break down their return on equity down into all of the following component EXCEPT A) Inventory turnover B) Profitability C) Efficiency of asset usage D) Use of leverage

The DuPont system of analysis allows firms to break down their return on equity down into all of the following component EXCEPT A) Inventory turnover B) Profitability C) Efficiency of asset usage D) Use of leverage

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 43MCQ: Which of the following is not included in the Dupont framework? a. a measure of profitability c. a...

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The DuPont system of analysis allows firms to break down their return on equity down into all of the following component EXCEPT

A) Inventory turnover
B) Profitability
C) Efficiency of asset usage
D) Use of leverage

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In the DuPont system, the return on total assets (asset) is equal to (return on equity) × (financial leverage multiplier). (net profit margin) × (fixed asset turnover). (return on equity) × (total asset turnover). (net profit margin) × (total asset turnover).
Which one of these ratios measures the efficiency at which a firm employs its assets? a. Return on equity b. Equity multiplier O C. Total asset turnover O d. P/E ratio O e. Profit margin
A. Which of the following is most closely associated with the cost of using assets? a. Asset utilization b. Sales revenue c. Proportion of debt and equity d. Average price B. Which of the following is most closely associated with the return on management’s use of assets? a. Cost of capital b. Mix of equity types c. Prime lending rate d. # of products sold
In the Du Pont method of analysis the two key drivers of return on equity are: a) Profit margin and return on assets b) Return on assets and the financing plan c) Profit margin and the financing plan In trying to measure a company's effectiveness in earning an adequate return on sales we would use which groups of ratios? a) Profitability ratios b) Asset utilization ratios c) Liquidity ratios
Calculate the following ratios: return on equity, return on assets (levered), return on sales (levered), asset turnover, and financial leverage.
In a DuPont analysis, what are the components of return on assets?a. Net Profit Margin Ratio and Debt Ratiob. Net Profit Margin Ratio and Leverage Ratioc. Net Profit Margin Ratio and Asset Turnover Ratiod. Asset Turnover Ratio and Leverage Ratio
If your goal is to determine how effective a firm in managing its assets, you would examine O Profit margin, Current ratio, Debt ratio O Price-earnings ratio, Times-interest-earned ratio, Operating Margin O Inventory turnover, Receivables turnover, Assets turnover O Quick ratio, Debt ratio, Times-interest-earned ratio
The business risk of a company is most accurately measured by the company's: a. Debt-to-equity ratio b. Efficiency in using assets to generate sales c. Operating leverage and level of uncertainly about demand output prices and competition
REQUIRED: • Vertical Analysis • Comment on the efficiency of the firm's operation using- asset turnover, inventory turnover, and, earnings per share • Comment on the proportion of cost of sales and operating expenses
how value drivers (Return on Equity, Net Profit Margin, and Total Asset Turnover) are related to financial statement analysis?
If a firm increases its leverage, which extended Du Pont equation ratio is directly affected? a. ROS b. Equity Multiplier c. Total Asset Turnover d. ROA
d. Calculate the Efficiency ratio which includes the sales to total assets ratio, operating return on assets, return on assets, ROA Model, return on equity, and ROE Model