The DuPont Identity Can Be Accurately Defined As

question 54

Multiple Choice

The DuPont identity can be accurately defined as:

• A)Return on equity × Total asset turnover × Equity multiplier.
• B)Equity multiplier × Return on assets.
• C)Profit margin × Return on equity.
• D)Total asset turnover × Profit margin × Debt-equity ratio.
• E)Equity multiplier × Return on assets × Profit margin.

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Definitions:

Benefit

The advantage or profit gained from something.

Absolute Advantage

The ability of a country, individual, or firm to produce a good more efficiently than another entity using the same amount of resources.

Comparative Advantage

An economic theory that suggests that countries or entities gain and benefit from trading if they specialize in producing goods for which they have a lower opportunity cost.

Trade

The act of buying, selling, or exchanging goods and services between people or entities, within or across borders.