Question

52. The following is NOT part of the DuPont analysis formula
a Profit Margin
b. Total asset Turnover
c. cash balance
d. financial leverage​

Answer 1

Answer:

What Is the DuPont Analysis?

The DuPont analysis (also known as the DuPont identity or DuPont model) is a framework for analyzing fundamental performance popularized by the DuPont Corporation. DuPont analysis is a useful technique used to decompose the different drivers of return on equity (ROE). The decomposition of ROE allows investors to focus on the key metrics of financial performance individually to identify strengths and weaknesses.

There are three major financial metrics that drive return on equity (ROE): operating efficiency, asset use efficiency and financial leverage. Operating efficiency is represented by net profit margin or net income divided by total sales or revenue. Asset use efficiency is measured by the asset turnover ratio. Leverage is measured by the equity multiplier, which is equal to average assets divided by average equity.

hope this helps you

Answer 2

Answer:

(C) Cash Balance

• Explanation:

The DuPont analysis (DuPont identity or DuPont model) is a framework for analyzing the performance of an institution.

DuPont Analysis= Net Profit Margin× Total asset turnover× Financial                Leverage

(A) Net Profit Margin :

The net profit margin is the ratio of bottom-line profits to total revenue or total sales.

                         Profit Margin  =  Net profit/ Revenue

(B) Total Asset Turnover Ratio :

The asset turnover ratio measures how efficiently a company uses its assets to generate revenue.

                    Asset Turnover Ratio = Revenue/ Average Assets

(D) Financial Leverage :

Financial leverage (equity multiplier) is an indirect analysis of a company's use of debt to finance its assets.

               

           Financial Leverage= Average Assets/ Average Equity