Question 72

Marquette Industries’ return on equity (ROE) increased from 18% to 21% over the past three years. This increase is least likely to be attributed to a(n):

A)    increase in Marquette’s net profit margin.

B)   decrease in Marquette’s financial leverage.

C)   increase in Marquette’s total asset turnover.

D)   decrease in accumulated other comprehensive income.

[此贴子已经被作者于2008-11-8 9:42:54编辑过]

答案和详解如下！

Question 72

Marquette Industries’ return on equity (ROE) increased from 18% to 21% over the past three years. This increase is least likely to be attributed to a(n):

A)    increase in Marquette’s net profit margin.

B)   decrease in Marquette’s financial leverage.

C)   increase in Marquette’s total asset turnover.

D)   decrease in accumulated other comprehensive income.

The correct answer was B) decrease in Marquette’s financial leverage.

The DuPont decomposition of ROE is:

A decrease in financial leverage will result in a decrease in ROE. Increases in the profit margin or total asset turnover increase ROE. A decrease in accumulated other comprehensive income represents a decrease in shareholders’ equity from a source not reflected on the income statement, resulting in an increase in ROE.

This question tested from Session 11, Reading 47, LOS a

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