The following information pertains to Andrew Co. for the year ended December 31:

Sales $720,000

Net income 120,000

Average total assets 480,000

Which one of the following formulas depicts the use of the DuPont model to calculate Andrew’s return on assets?

Answer (C) is correct. The DuPont model depicts return on assets as total asset turnover (sales divided by average total assets) times the profit margin (net income divided by sales). Therefore Andrew’s ROA calculation uses the formula [ (720,000 ÷ 480,000) × ($120,000 ÷ $720,000)].