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Dupont analysis helps to identify the source of a company’s return. It gives an expanded form of the RoE of the company by breaking down the RoE into three ratios related to profitability (net profit margin), operational efficiency (total asset turnover), and financial leverage (equity multiplier). Thus, it’s helpful in analyzing the reason for the profitability of a company. As per DuPont analysis, RoE = Net profit margin * asset turnover * financial leverage Financial Leverage = Assets/Shareholders’ Equity It is possible for a company with terrible sales and margin to take on excessive debt and artificially increase its return on equity. The equity multiplier allows the investors to see what proportion of return on equity is of debt.
Which of the following is not a qualitative characteristic of accounting information?
Which of the following financial services are regulated by the IFSCA?
Compute the Total Assets to Debt Ratio from the following information:
Share Capital: ₹12,00,000
Reserves and Surplus: ₹8,00,000
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