DuPont Analysis Can Reveal If an Organization's Low ROE Is

question 10

Multiple Choice

DuPont analysis can reveal if an organization's low ROE is due to which of the following factors?

• A) Poor pricing
• B) Excessive expenses
• C) Under-performing assets
• D) Under-utilization of debt
• E) All of these are correct.

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Definitions:

Administrative Expense

Expenses related to the general operation of a business, including salaries of non-sales personnel, rent, and utilities.

Net Sales

Net sales of a company, calculated by deducting returns, discounts, and allowances for damaged or missing products from its gross sales.

Unrealized Gain

Increases in the value of an asset that has not been sold, thus not yet generating actual cash income.

Available-For-Sale Securities

Securities that are held with the intent of selling them sometime in the future.