Under the DuPont 3-point analysis, Return on Equity (ROE) is decomposed into the product of which three financial ratios?
Select Your Answer (Keyboard: A, B, C, D)
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Financial ManagementMCQQuestion 13439 of 300
All Questions Correct Answer
✅ Option B — Net Profit Margin × Asset Turnover × Equity Multiplier
All Options:
- ANet Profit Margin × Inventory Turnover × Debt-Equity Ratio
- BNet Profit Margin × Asset Turnover × Equity Multiplier ✓
- COperating Margin × Capital Turnover × Return on Capital
- DGross Profit Margin × Asset Turnover × Debt Ratio
Detailed Solution & Explanation
Correct Answer: Option **B** (Net Profit Margin × Asset Turnover × Equity Multiplier)
**Financial Management Derivation (Ratio Analysis - DuPont 3-Point ROE):**
Hence, Option B is the correct answer.
More Questions from Financial Management
A company has sales of ₹50,00,000, variable costs of ₹30,00,000, fixed operating costs of ₹10,00,000, and 10% debentures of ₹20,00,000. Compute the Operating Leverage (DOL), Financial Leverage (DFL), and Combined Leverage (DCL).
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4. What is the Net Present Value of the investment proposal?
2. What would be the Market Price per Share (MPS) of the company if Price Earnings Ratio (PE ratio) in Plan-1 is 12 times and Plan-II is 15 times?
3. What would be the financial Break Even Point (BEP) in Plan-I and Plan-II?
7. Current Assets and Current Liabilities would be:
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