Asked by Abena Opoku on Jun 03, 2024
Verified
Which of the following ratios is not part of the DuPont model?
A) Total asset turnover.
B) Debt-to-equity.
C) Net profit margin.
D) Return on equity.
DuPont Model
A financial analysis framework that breaks down return on equity into three components: profit margin, asset turnover, and financial leverage.
Debt-To-Equity
A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company’s assets, illustrating financial leverage.
- Understand the principles of the DuPont model in analyzing Return on Equity through its constituent ratios.
Verified Answer
KR
krista roblesJun 07, 2024
Final Answer :
B
Explanation :
All of the other ratios (total asset turnover, net profit margin, and return on equity) are part of the DuPont model, which is used to analyze a company's return on equity by looking at its profitability, efficiency, and financial leverage. Debt-to-equity, while an important financial ratio, is not included in the DuPont model.
Learning Objectives
- Understand the principles of the DuPont model in analyzing Return on Equity through its constituent ratios.