Under the DuPont System, the Return on Assets Is Equal

question 48

Multiple Choice

Under the DuPont system, the return on assets is equal to:

• A)the product of the gross profit margin and inventory turnover.
• B)the sum of the debt-equity ratio and the return on sales.
• C)the product of the return on sales and total asset turnover.
• D)the product of the return on sales, total asset turnover, and equity multiplier.
• E)None of the above

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Definitions:

Undercapitalization

The lack of funds to operate a business normally.

Small-Business Failure

A situation where a small-sized business is unable to continue operation due to financial, managerial, or market-related problems.