The DuPont analysis decomposes ROE into:

A Revenue and costs

B Profit margin, asset turnover, and financial leverage

C Cash flow and debt

D Revenue and expenses only

✓ Correct Answer: Option B

DuPont: ROE = Net Profit Margin × Asset Turnover × Equity Multiplier.

💡 Why is B) the correct answer?

The correct answer to the question "The DuPont analysis decomposes ROE into:" is Option B: Profit margin, asset turnover, and financial leverage.

The other options — A) Revenue and costs, C) Cash flow and debt, D) Revenue and expenses only — are incorrect for this CFA Exam Prep question. As explained above: DuPont: ROE = Net Profit Margin × Asset Turnover × Equity Multiplier.

📚 About This CFA Exam Prep Practice Question

This 2-level CFA Exam Prep question from the Financial Reporting & Analysis topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CFA Exam Prep practice test or use flashcards for spaced repetition review.

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The DuPont analysis decomposes ROE into:

✓ Correct Answer: Option B

📚 About This CFA Exam Prep Practice Question

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