In the DuPont System of Analysis, the Return on Total

question 85

Multiple Choice

In the DuPont system of analysis, the return on total assets (asset) is equal to ________.

• A) (return on equity) × (financial leverage multiplier)
• B) (return on equity) × (total asset turnover)
• C) (net profit margin) × (fixed asset turnover)
• D) (net profit margin) × (total asset turnover)

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Definitions:

Perfectly Competitive

Refers to a market scenario where an unlimited number of buyers and sellers operate, and the single product offered is homogenous, making no single entity able to influence the market price.

Marginal Cost

The cost of producing one additional unit of a product or service, a crucial concept for optimizing production and pricing decisions.

Fixed Cost

Costs that do not vary with the level of output, remaining constant even if production is zero.

Variable Costs

Costs that change in proportion to the level of production or business activity, such as materials and labor directly involved in manufacturing.