The Modified DuPont Formula Relates the Firm's Return on Total

question 208

Multiple Choice

The modified DuPont formula relates the firm's return on total assets (ROA) to its ________.

• A) return on equity (ROE)
• B) operating leverage multiplier
• C) net profit margin
• D) total asset turnover

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Definitions:

Dividends

Payments made by a corporation to its shareholders, typically from profits, as a distribution of earnings.

Equity Method

An accounting technique used to record investments in other companies, recognizing income proportional to the ownership percentage.

Net Income

A company's ultimate earnings after all taxes, costs, and expenses are subtracted from the gross income.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.