Du Pont System of Ratio Analysis
1a) List the intuitive interpretations (names of the fivecomponents of the Return on Equity in the Du Pont System of RationAnalysis.
b) State whether a firms tax burden ratio will be higher orlower if it pays less taxes relative to pretax profit and givereason for your answer.
c) State whether a firms interest-burden ratio will be higher orlower if it pays more Interest relative to Earnings Before Interestand Taxes and give the reason for your answer.
