Which of the Following Statements Best Describes the Du Pont

question 70

Multiple Choice

Which of the following statements best describes the Du Pont analysis?

• A) Suppose a firm's total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt increases from 40% of total assets to 60%. Under these conditions, the ROE will increase.
• B) Suppose a firm's total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10% and its debt increases from 40% of total assets to 60%. Without additional information, we cannot tell what will happen to the ROE.
• C) The modified Du Pont equation provides information about how operations affect the ROE, but the equation does not include the effects of debt on the ROE.
• D) Suppose a firm's total assets turnover ratio falls from 1.0 to 0.9, but at the same time its profit margin rises from 9% to 10%, and its debt increases from 40% of total assets to 60%. Under these conditions, the ROE will decrease.

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Definitions:

Modifiable Risk Factors

Aspects or behaviors that can be altered to reduce the risk of disease, such as diet, exercise, and smoking habits.

Amenorrhea

The lack of menstrual periods in a woman who is of reproductive age, potentially indicating different medical issues.

Nonmodifiable Risk Factors

Risk factors for diseases that cannot be altered by lifestyle changes, such as age, gender, and genetic predisposition.

Advanced Age

A stage of life often associated with old age, typically reflecting a higher risk of health problems and decreased physical capabilities.