What does the DuPont analysis decompose return on equity into?
- A Net profit margin, asset turnover and equity multiplier
- B Revenue, cost and tax
- C Liquidity, solvency and profitability
- D Alpha, beta and gamma
Answer
Net profit margin, asset turnover and equity multiplier
It reveals whether ROE is driven by profitability, efficiency or leverage, and leverage-driven ROE carries more risk.





