The Formula Which Breaks Down the Return on Equity into Three

question 94

Multiple Choice

The formula which breaks down the return on equity into three component parts is referred to as which one of the following?

• A)equity equation
• B)profitability determinant
• C)SIC formula
• D)Du Pont identity
• E)equity performance formula

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Definitions:

Savings Rate

The portion of disposable income not spent on consumption of goods and services but saved or invested, usually expressed as a percentage of disposable income.

Consumption

Consumption refers to the use of goods and services by households for personal satisfaction or living standards.

Credit Availability

Refers to the ease with which individuals or businesses can obtain loans or credit from financial institutions.

Durable Goods

are items with a long life expectancy, such as automobiles, furniture, and appliances, typically used over years rather than consumed quickly.