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The DuPont formula relates return on equity ( = Net income ? t Stockholders equity ? t ) to the company's net profit margin (
The DuPont formula relates return on equity Net income Stockholders equity to the company's net profit margin Net income Sales asset turnover Sales Total assets and equity multiplier Total assets Stockholders equity This Company is in an industry where the average net profit margin is the debttoasset ratio Debt Total assets is and return on equity is Find below the Company's financial statements for year
For the company relative to the industry, select the one statement most consistent with the DuPont analysis.
a the company's asset turnover indicates sales are unusually large relative to its assets
b the company's profit margin indicates its revenues are unusually large relative to its costs
c the company's equity multiplier indicates the firm has an unusually small debt burden
d the company's asset turnover indicates sales are unusually small relative to its assets
e the company's equity multiplier indicates the firm has an unusually large debt burden
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