Traditional Home$$s extended DuPont Equation is:

$15\mathrm{.}46\%=4\mathrm{.}98\%$ x $1\mathrm{.}616$ x $1\mathrm{.}92$

The industry$$s extended DuPont Equation is:

$20\mathrm{.}40\%=6\mathrm{.}6\%$ x $1\mathrm{.}670$ x $1\mathrm{.}85$

Which of the following statements is true regarding the DuPont analysis of return on equity for Traditional Home versus the industry?

Answers:

Tradiational Home is better able to control expenses and earn a profit than the industry standard.

The lower profit margin is the primary reason Traditional Home$$s ROE is lower than the industry average.

The lower total asset turnover is the primary reason Traditional Home$$s ROE is lower than the industry average.

The low use of leverage compared to industry companies primarily explains Traditional Home$$s lower ROE.