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What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common
What is the advantage to using the DuPont system to calculate ROE over the direct calculation of earnings available for common stockholders divided by common stock equity? Select from the dropdown menus.
Observe the modified DuPont formula see and notice that each component can be compared with industry standards to assess the firm's performance. Therefore, the advantage of using the Dupont system is that ROE is broken into three distinct components. Starting at the right we see how has increased assets over the owners' original equity. Next, moving to the left, we see how efficiently the firm used its to generate sales. Finally, the shows the measure of profitability on sales.
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