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The following information is presented for a Company for three years: ...

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Accounting

The following information is presented for a Company for three years:

Year 1 Year 2 Year 3
Profit Margin Ratio or Net Profit Ratio 4.7% 8.2% 3.2%
Return on Assets 4.1% 7.8% 3.6%
Leverage Ratio 2.71 2.9 3.05

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Part 1

Using Dupont Analysis, indicate which of the following statements is true:

A.

Net Profit margin was the most significant driver of the Company's Return on Equity in Year 2 and Year 3.

B.

Leverage was the most significant driver of the Company's Return on Equity in Year 2.

C.

Year 3 resulted in the greatest Return on Equity as compared to Year 1 and Year 2.

D.

Return on Equity for Year 2 was driven more by profitability and efficiency and less by leverage.

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