Which of the following regarding the Dupont Framework is false?

The correct answer reflects the principles of the DuPont Framework, which examines how different factors contribute to a company's overall return on equity (ROE). The framework breaks down ROE into three main components: efficiency (asset turnover), profitability (net profit margin), and leverage (equity multiplier).

When evaluating the statement regarding net income and sales, if a firm's net income increases relative to sales, this indicates an improvement in profitability. As net income rises while sales do not fall proportionally, the net profit margin—or profitability—component must also rise. This relationship directly supports the understanding that an increase in net income signals enhanced performance in the profitability aspect of the DuPont Analysis.

This foundational logic confirms that option D is indeed false because it contradicts the principle that increased net income relative to sales leads to a higher profitability component.