Question 2 5 points You are examining the return on equity (ROE) for the two firms below by applying the DuPont identity. Which of the following statements is true? Select the best answer. Select Balance Sheet and Income Statement Data in ($mn) Firm E Sales Net Income Total Assets Book Value of Equity (Stockholders Equity) 9,800 4,850 36,250 32,625 Firm Y 4,900 1,300 14,800 12,500 1. The ROE of firm E is higher than the ROE of firm Y because firm E has a higher profit margin than firm Y. II. The ROE of firm E is higher than the ROE of firm Y because firm E has a higher asset turnover than firm Y. III. The ROE of firm E is higher than the ROE of firm Y because firm E has a higher equity multiplier than firm Y. IV. The ROE of firm E is lower than the ROE of firm Y because firm E has a lower profit margin than firm Y. V. The ROE of firm E is lower than the ROE of firm Y because firm E has a lower asset turnover than firm Y. VI. The ROE of firm E is lower than the ROE of firm Y because firm E has a lower equity multiplier than firm Y.

You are examining the retum on equity (ROE) for the two firms below by applying the DuPont identity, Which of the following statements is true? Select the best answer. The ROE of firm E is higher than the ROE of firm Y because firm E has a higher profit margin than firm Y. 1. The ROE of firm E is higher than the ROE of firm Y because form E has a higher assot turnover than firm Y 1il. The ROE of firm E is higher than the ROE of firm Y because firm E has a higher equity multiplier than firm Y. IV. The ROE of firm E is lower than the ROE of firm Y because firm E has a lower profit margin than firm Y. V. The ROE of firm E is lower than the ROE of firm Y because firm E has a lower asset tumover than firm Y V. The ROE of firm E is lower than the ROE of firm Y because firm E has a lower equity multiplier than firm Y