Question 19 1 point The DuPont identity breaks down return o

Question 19 (1 point) The DuPont identity breaks down return on equity (ROE) into the following components: profit margin, total asset turnover, and equity multiplier profit margin, total debt ratio, and equity multiplier return on assets (ROA), profit margin, and equity multiplier profit margin, total asset turnover, and total debt ratio current ratio, total asset turnover, and equity multiplier

Solution

ROE=Net income/Total equity

Profit margin=Net income/Sales

Total asset turnover=Sales/Total assets

Equirty multiplier=Total assets/Total equity

Hence ROE=Profit margin*Total asset turnover*Equity multiplier

Hence the correct option is A.