The DuPont system allows us to break down the return on equity into:
A. return on assets and the financial leverage ratio.
B. profit margin, the tax retention ratio, and inventory turnover.
C. gross profit margin, total asset turnover, and the debt-to-equity ratio.
Ans: A. return on assets and the financial leverage ratio.
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Kansas Bank has a policy of limiting their loans to any single customer so that the maximum loss as a percent of capital will not exceed 20 percent for both secured and unsecured loans. The limit has been adopted under the assumption that if the unsecured loan is defaulted, there will be no recovery of interest or principal payments. For loans that are secured (collateralized), it is expected that 40 percent of interest and principal will be collected. What is the concentration limit (as a % of capital) for secured loans made by this bank?
A. 10 percent. B. 20 percent. C. 33 percent. D. 40 percent. E. 50 percent.
Normally a broker earn a commission only if he or she creates a binding contract during the term of the listing. What clause in a listing contract provides an exception to the rule?
a. A hold harmless clause. b. A protection period clause. c. An exculpatory clause. d. An acceleration clause.