The Three Basic Ratios Used in the DuPont System of Analysis

question 112

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 financial leverage multiplier
• D)net profit margin,financial leverage multiplier,and return on equity

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Definitions:

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of units produced, indicating the cost per unit of output.

Marginal Cost

The cost of producing one additional unit of a good or service, which can influence production decisions.

Product Differentiation

A strategy businesses use to make their products unique from competitors'.

Elastic

Describes a situation in economics where the demand or supply of a good is sensitive to changes in price.