medium · Principles of Finance financial-statements-markets-wc

In the Five-Way DuPont decomposition, how does a significant increase in capital expenditure (funded by cash) primarily affect the ROE if the new assets are not yet productive?

1. The EBIT Margin will increase, raising ROE
2. The Asset Turnover will decrease, lowering ROE
3. The Tax Burden will increase, lowering ROE
4. The Equity Multiplier will decrease, lowering ROE

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