options for profit margin: net income, net sales, gross profit

asset turnover: net income, sales, EBIT

total assets: return on assets, retained earnings, equity multiplier

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: ROE = Profit Margin X Total Assets Turnover / Sales / Total Assets X Total Assets / Total Common Equity 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 can 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 various terms of the DuPont equation for three companies: ROE Profit Margin X Total Assets Turnover X Equity Multiplier Company A 12.0% 57.3% 9.8 2.14 Company B 15.5% 58.2% 10.2 2.61 Company C 21.5% 58.0% 10.3 3.60 Referring to these data, which of the following conclusions will be true about the companies' ROES? The main driver of Company C's superior ROE, as compared with that of Company A's and Company B's ROE, is its greater use of debt financing. The main driver of Company A's inferior ROE, as compared with that of Company B's and Company C's ROE, is its use of higher debt financing. The main driver of Company C's superior ROE, as compared with that of Company A's and Company B's ROE, is its efficient use of assets