Busıness Fınance I Deneme Sınavı Sorusu #1181078
Which of the following ratios are used to compute ROE in DuPont Analysis?
I. Operating profit margin
II. Net profit margin
III. Working Capital turnover
IV. Asset turnover
V. Debt ratio
VI. Equity multiplier
I, II, V |
III, IV |
I; IV, V |
II, III, VI |
II, IV, VI |
ROE = (net income / sales) * (sales / average shareholders’ equity)
The first component of the equation is net profit margin and the second is the equity turnover ratio.
This equation can further be written as:
• ROE = (net income / sales) * (sales / average total assets) * (average total assets / shareholders’ equity)
In this case the equation for ROE breaks it into three components, net profit margin, asset turnover
ratio and equity multiplier:
• ROE = (net profit margin) * (asset turnover) * (equity multiplier)
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