The Modified DuPont Equation Says That a Firm with a Low

question 12

Multiple Choice

The modified DuPont equation says that a firm with a low return on total assets can improve its return on equity,all else remaining the same,by ________.

• A)financing more of its assets with debt
• B)increasing its total asset turnover
• C)using less debt
• D)decreasing its total asset turnover

---

Definitions:

Financial Accounting Standards Board

An independent organization responsible for establishing and improving standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information.

SEC

The Securities and Exchange Commission, a U.S. government agency that oversees and regulates the securities markets to protect investors.

Accounting Standards

Guidelines set by regulatory bodies that dictate how financial transactions and statements should be recorded and reported.

FASB

The Financial Accounting Standards Board, an organization responsible for establishing accounting and financial reporting standards in the United States.