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Question 24 (3 points) When we utilize the DuPont Equation (or DuPont Analysis), we are attempting to understand/explain return on equity, and we do so
Question 24 (3 points) When we utilize the DuPont Equation (or DuPont Analysis), we are attempting to understand/explain return on equity, and we do so by breaking down return on equity into three components (or factors). These three components are: Use of leverage (or debt financing), profitability relative to sales (or operating efficiency), and the earnings retention rate (proportion of earnings kept in the company) Profitability relative to sales (or operating efficiency), cash coverage of interest expense, and sustainable growth Efficiency in utilizing assets (total asset turnover), use of leverage (or debt financing), and market-based ratios Sustainable growth, profitability relative to sales (or operating efficiency), and the marginal tax rate Use of leverage (or debt financing), profitability relative to sales (or operating efficiency), and efficiency in utilizing assets (total asset turnover)
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