The Three Basic Ratios Used in the DuPont System of Analysis

question 62

Multiple Choice

The three basic ratios used in the DuPont system of analysis are ________.

• A) net profit margin, total asset turnover, and return on investment
• B) net profit margin, total asset turnover, and return on equity
• C) net profit margin, total asset turnover, and equity multiplier
• D) net profit margin, financial leverage multiplier, and return on equity

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Definitions:

Budgeting

The process of creating a plan to spend your money, forecasting future income and expenses over a specified period.

Activity Variance

The difference between planned activity levels or costs and actual activity levels or costs.

Other Expenses

Expenses not directly tied to the production of goods or services, such as administrative and selling expenses.

Budgeting

The practice of formulating a budget to dictate how you’ll use your money, identifying prospective financial aims and the approaches to attain them.