DuPont Analysis

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8 Terms

1
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Why ?

Detailed understanding of what is driving a company ROE

2
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ROE

Profit margin x Asset Turnover x Levrage

3
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Profit margin does what ?

Measure company operating efficiency → net income generated from Sales

4
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Asset Turnover does what ?

How well a company is using its assets to generate Net sales

5
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Leverage does what ?

Measures how much a company finances its assets through liabilities

6
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Profit Margin

Net Income/Net Sales

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Asset turnover

Net Sales/(Avg) Total Assets

8
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Leverage

(Avg) Total Asset/(avg) Equity