n the 5-way DuPont deconstruction, the option that would lead to an INCREASE in Return on Equity (ROE), all else kept equal is: "an increase in sales using existing/available productive capacity" (Option B)
The DuPont Corporation popularized the DuPont analysis, a paradigm for evaluating basic performance.
DuPont analysis is a practical method for breaking down the various factors that affect return on equity (ROE).
Investors may concentrate on each of the important financial performance parameters independently to pinpoint strengths and problems thanks to the breakdown of ROE.
The tool comes in two variations, one of which takes decomposition into account in three stages and the other in five.
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Full Question:
In the 5-way DuPont deconstruction, which of the following would lead to an INCREASE in Return on Equity (ROE), all
else kept equal?
a. retiring debt and reducing the debt/equity ratio
b. an increase in sales using existing/available productive capacity
c. an increase to the firm's overall cost of debt
d. a decrease in the tax burden ratio used in DuPont analysis
e. a decrease in the gross margin
