Company A and Company B both operate in the same industry and report an identical ROE of 20%. DuPont Analysis reveals that Company A's high ROE is driven by a high Net Profit Margin, whereas Company B's ROE is driven primarily by a high Equity Multiplier. Which statement accurately interprets these findings?

DuPont Analysis enables financial analysts to look beneath the surface of a single ROE figure: • Company A achieves its 20% ROE through high operational efficiency (strong net profit margins), meaning it manages costs effectively or commands premium pricing. • Company B achieves its 20% ROE by using a large amount of debt relative to equity (high financial leverage/equity multiplier). While this boosts equity returns during good times, it exposes Company B to higher financial distress and interest burden risks.