Which of the Following Ratios Is Decomposed Using the DuPont

question 24

Multiple Choice

Which of the following ratios is decomposed using the DuPont framework?

• A) Return on equity
• B) Asset turnover
• C) Assets-to-equity ratio
• D) Return on sales

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Definitions:

Net Operating Income

An indicator of a firm's profitability from standard operations, excluding non-operational income and expenses like taxes and interest.

Operations

The activities involved in running a business, production, or system effectively and efficiently.

Contribution Margin

It refers to the amount of revenue remaining after deducting variable costs, which can contribute to covering fixed costs and generating profit.

Operations

The day-to-day activities involved in running a business, focusing on creating and delivering products or services.