What Are the Three Ratios Used in the DuPont System

question 28

Essay

What are the three ratios used in the DuPont system of financial analysis of return on equity?

---

Definitions:

Equilibrium Price

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, leading to market stability.

Tax Levied

An amount charged by the government on products, income, or activity, required to be paid by individuals or corporations to finance government activities.

Government Subsidy

A financial contribution by a government to a private sector entity for the purpose of lowering the cost of a service or product or supporting a particular activity deemed beneficial.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing to purchase at that price.