Using DuPont Analysis,what Are the Components of Return on Assets

question 28

Multiple Choice

Using DuPont analysis,what are the components of return on assets?

• A)Return on Sales and Debt Ratio
• B)Return on Sales and Leverage Ratio
• C)Return on Sales and Total Asset Turnover Ratio
• D)Total Asset Turnover Ratio and Leverage Ratio

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Definitions:

Direct Materials

Raw materials that can be directly linked to the production of finished goods in manufacturing.

Fixed Overhead

Fixed Overhead refers to the consistent, non-variable expenses incurred by a business, regardless of its level of production or sales activities.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportional relationship between fixed and variable costs.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and profit.