9. The DuPont equation Corporate decision makers and analysts often use a particular technique, called a DuPont analysis, to better understand the factors that drive a company's financial performance, as reflected by its return on equity (ROE), By using the DuPont equation, which disaggregates the ROE into three components, analysts can see why a company's ROE may have changed for the better or worse, and identify particular company strengths and weaknesses. The DuPont Equation A. DuPont analysis is conducted using the DuPont equation, which helps to identify and analyze three important factors that drive a company's RoE. Complete the following equations, which are needed to conduct a DuPont analysis: Most investors and analysts in the financial community pay particular attention to a company's RoE. The ROE can be calculated simply by dividing a firm's net Income by the firm's shareholder's equity, and it ean be subdivided into the key factors that drive the RoE: Investors and analysts focus on these drivers to develop a clearer picture of what is happening within a company. An analyst gathered the following data and calculated the varlous terms of the Dupont equation for three companies: Referring to these data, which of the following conclusions will be true about the compunies' ROEs? The main driver of company As interiser rot, ar compared to that of compsny a's and eompany C's ROE, is its use of higher debt financing. The moin ditver of company Cs superior ROE, as compured to that of company A's and company lis RoE, is its operational efficlencr. The main driver of company C's superior ROE, as compured to that of company As and company B's RoE, is its greater use of debt: financing