Which Portion of the DuPont Identity Measures the Financial Leverage

question 65

Multiple Choice

Which portion of the DuPont identity measures the financial leverage employed by a firm?

• A)Both the profit margin and the equity multiplier
• B)Equity multiplier
• C)Total asset turnover
• D)Both the capital intensity ratio and the total asset turnover
• E)Both the capital intensity ratio and the debt-equity ratio

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Definitions:

Biasing Power

The ability of certain factors or biases to influence or distort judgment and decisions.

Agoraphobia

An anxiety disorder characterized by the intense fear of places or situations where escape might be difficult or help may not be available.

Panic Attack

An abrupt onset of intense fear or discomfort, marked by physical and psychological symptoms like rapid heartbeat and feelings of unreality or detachment.

Hyperventilate

To breathe more rapidly and deeply than is necessary for normal levels of oxygen, which can result in dizziness, light-headedness, or fainting.