The three input ratios (not output) to the DuPont model of financial statement analysis are: a) Net profit margin, total asset turnover, and return on investment. b) Net profit margin, total asset turnover, and return on equity. c) Net profit margin, total asset turnover, and leverage (equity multiplier). d) Net profit margin, financial leverage multiplier, and return on equity.
The three input ratios (not output) to the DuPont model of financial statement analysis are: a) Net profit margin, total asset turnover, and return on investment. b) Net profit margin, total asset turnover, and return on equity. c) Net profit margin, total asset turnover, and leverage (equity multiplier). d) Net profit margin, financial leverage multiplier, and return on equity.
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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The three input ratios (not output) to the DuPont model of financial statement analysis are:
Transcribed Image Text:### DuPont Model of Financial Statement Analysis
The **DuPont model of financial statement analysis** is a valuable framework used to decompose a company's return on equity (ROE) into three critical components. The analysis highlights the strengths and weaknesses of a company's financial performance. The three **input ratios** (not output) to the DuPont model are:
#### Options:
- **a) Net profit margin, total asset turnover, and return on investment.**
- **b) Net profit margin, total asset turnover, and return on equity.**
- **c) Net profit margin, total asset turnover, and leverage (equity multiplier).**
- **d) Net profit margin, financial leverage multiplier, and return on equity.**
Understanding these components will help in the comprehensive analysis of a company's financial health and operational efficiency.
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