Explanation:

The correct answer is B (1.3). According to the DuPont analysis, Return on Equity (ROE) can be decomposed into:

$ROE = \text{Net Profit Margin} \times \text{Total Asset Turnover} \times \text{Financial Leverage}$

Rearranging the formula to solve for Total Asset Turnover:

$\text{Total Asset Turnover} = \frac{ROE}{\text{Net Profit Margin} \times \text{Financial Leverage}}$

Substituting the given values:

$\text{Total Asset Turnover} = \frac{10\%}{4\% \times 2.0} = 1.25 \approx 1.3$

• Option A (1.0) is incorrect because it mistakenly uses the EBIT Margin instead of the Net Profit Margin in the calculation.
• Option C (1.5) is incorrect because it includes the Interest Burden, which is not part of the standard DuPont formula for Total Asset Turnover.