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Suppose you were comparing a discount merchandiser with a high-end merchandiser. Suppose further that both companies had identical ROEs. If you applied the DuPont equation
Suppose you were comparing a discount merchandiser with a high-end merchandiser. Suppose further that both companies had identical ROEs. If you applied the DuPont equation to both firms, would you expect the three components (Equity Multiplier, Profit Margin, Total Asset Turnover) to be the same for each company? If not, explain what balance sheet and income statement items might lead to the component differences.
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