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The DuPont equation shows the relationships among asset management, debt management, and ratios. Management can use the DuPont equation to analyze ways of improving the firm's performance. Its equation is:

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ProfLincoln

Answer:

Return on equity (ROE) = profit margin × asset turnover × financial leverage

Step-by-step explanation:

Return on equity (ROE) = profit margin × asset turnover × financial leverage

Which can be written as:

ROE = (net income÷ sales) × (sales ÷ total assets) × (total asset ÷ average shareholder equity)

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