Which of the Following Scenarios Would Increase ROE Using the DuPont

question 24

Multiple Choice

Which of the following scenarios would increase ROE using the DuPont formula?

• A) An increase in profit, a decrease in total assets, and a reduction in equity
• B) An increase in profit, an increase in total assets, and an increase in equity
• C) An increase in profit, an increase in total assets, and a reduction in equity
• D) A decrease in profit, a decrease in total assets, and a reduction in equity
• E) A decrease in profit, a decrease in total assets, and an increase in equity

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Definitions:

Accounting Break-Even

The point at which total revenues equal total expenses, and the business does not make a profit or loss.

Depreciation

A financial approach that spreads the price of a tangible asset over the period it is expected to benefit the company.

Annual Fixed Costs

The total of all business expenses that are consistent and unchanged throughout the fiscal year, regardless of production levels or sales volume.

Contribution Margin

The contribution margin represents the portion of sales revenue that is not consumed by variable costs and contributes to covering the company's fixed costs.