Using the modified DuPont formula allows the analyst to break ...

[V@ndy87]

Using the modified DuPont formula allows the analyst to break Dana Dairy Products return on equity into 3 components: the net profit margin, the total asset turnover, and a measure of leverage (the financial leverage multiplier).
 
  Which of the following mathematical expressions represents the modified DuPont formula relative to Dana Dairy Products' 2013 performance? (See Table 3.2)
  A) 5.6(ROE) = 2.5(ROA)  2.22(Financial leverage multiplier)
  B) 5.6(ROE) = 3.3(ROA)  1.70(Financial leverage multiplier)
  C) 4.0(ROE) = 2.5(ROA)  2.00(Financial leverage multiplier)
  D) 2.5(ROE) = 5.6(ROA)  2.22(Financial leverage multiplier)

Question 2

As the need for capital increases beyond the optimum capital structure, the cost of debt financing will ________, ________ the firm's weighted average cost of capital.
 
  A) increase; lowering
  B) increase; raising
  C) decrease; lowering
  D) decrease; raising

[robbielu01]

Answer to Question 1

A

Answer to Question 2

B

[V@ndy87]

Gracias!

[meganmoser117]

Excellent