Du Pont System of Ratio Analysis

1a) List the intuitive interpretations (names of the five components of the Return on Equity in the Du Pont System of Ration Analysis.

b) State whether a firms tax burden ratio will be higher or lower if it pays less taxes relative to pretax profit and give reason for your answer.

c) State whether a firms interest-burden ratio will be higher or lower if it pays more Interest relative to Earnings Before Interest and Taxes and give the reason for your answer.