The DuPont Model Measures ROE by Multiplying ________

question 40

Multiple Choice

The DuPont Model measures ROE by multiplying ________.

• A) the current ratio x total asset turnover x the equity multiplier
• B) the profitability ratio x times interest earned x the equity multiplier
• C) the profitability ratio x total asset turnover x the equity multiplier
• D) the current ratio x times interest earned x the equity multiplier

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Definitions:

Natural Rate

The long-term unemployment rate that is observed once the effect of short-term cyclical factors has been removed and is thought to be due to structural factors in the economy.

Bureau of Labor Statistics

A government agency that collects, analyzes, and disseminates essential economic information to support public and private decision-making.

Natural Rate

The rate of any economic variable, such as unemployment or interest, believed to be inherent when the economy is in equilibrium.

Economic Policy

A course of action that is intended to influence or control the behavior of the economy, including taxation, government budgets, and interest rates.