Derive the five-factor DuPont identity

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DuPont Identity - The DuPont identity presented in the chapter is commonly referred to as the three-factor DuPont identity. Another common way that the DuPont identity is expressed is the five-factor model, which is:

ROE = Net income EBT× EBTEBIT× EBIT Sales × Sales Total assets × Total assets Equity

Problem 1: Derive the five-factor DuPont identity (EBT is earnings before tax, but after interest). What does each term measure?

Reference no: EM132835554

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