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:

Licensing

A business arrangement in which one party allows another to use its trademark, patent, or technology in exchange for a fee or royalty.

Franchising

A method of doing business wherein a franchisor licenses trademarks and proven methods of doing business to a franchisee in exchange for a recurring payment, and usually a percentage of gross sales or gross profits as well as the annual fees.

Indirect Exporting

The process of selling products to a foreign market through an intermediary, such as an export trading company or an export management company, rather than directly to the consumer or retailer.

Direct Exporting

A method of entering a foreign market by selling goods directly to customers in another country, bypassing any intermediaries.