The DuPont Identity holds that ROE = PM x T/A T/O x EM. However, after doing some quick algebra, ROE still equals net income divided by owner's equity. What does the DuPont Identity accomplish witH its expansion of the ROE into profit margin, total asset turnover and equity multiplier components? O The identity allows expanding the ROE into the aftertax income. O The identity uses the ROE in describing such things as the costs of Obamacare. O The identity can reveal the impact of new borrowing on employee morale. O The identity separates the ROE into operating, capital budgeting and capital structure components. The identity is used by bankers in meeting capital requirements under the Dodd Frank Act.
The DuPont Identity holds that ROE = PM x T/A T/O x EM. However, after doing some quick algebra, ROE still equals net income divided by owner's equity. What does the DuPont Identity accomplish witH its expansion of the ROE into profit margin, total asset turnover and equity multiplier components? O The identity allows expanding the ROE into the aftertax income. O The identity uses the ROE in describing such things as the costs of Obamacare. O The identity can reveal the impact of new borrowing on employee morale. O The identity separates the ROE into operating, capital budgeting and capital structure components. The identity is used by bankers in meeting capital requirements under the Dodd Frank Act.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:The DuPont ldentity holds that ROE = PM x T/A T/O x EM. However, after doing some quick algebra,
ROE still equals net income divided by owner's equity. What does the DuPont Identity accomplish with
its expansion of the ROE into profit margin, total asset turnover and equity multiplier components?
O The identity allows expanding the ROE into the aftertax income.
O The identity uses the ROE in describing such things as the costs of Obamacare.
O The identity can reveal the impact of new borrowing on employee morale.
O The identity separates the ROE into operating, capital budgeting and capital structure components.
O The identity is used by bankers in meeting capital requirements under the Dodd Frank Act.
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