Answer the Following Question(s)using the Information Below

question 127

Multiple Choice

Answer the following question(s) using the information below:
Coldbrook Company has two sources of funds: long-term debt with a market and book value of $15 million issued at an interest rate of 10%, and equity capital that has a market value of $9 million (book value of $5 million) .Coldbrook Company has profit centres in the following locations with the following operating incomes, total assets, and current liabilities.The cost of equity capital is 15%, while the tax rate is 30%.
-Which two ratios are used in the DuPont method of profitability analysis to create return on assets?

• A)profit margin and asset turnover
• B)asset turnover and return on investment
• C)profit margin and operating leverage
• D)profit margin and return on sales
• E)return on sales and return on assets

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