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What is dupont analysis?

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Question ajoutée par faisal rajpoot , Assistant Exports , SHAHKAM INDUSTRY PVT.(LTD)
Date de publication: 2015/06/28
Shahbaz Hayder
par Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

DuPont formula also known as the DuPont analysis, DuPont Model, DuPont equation or the DuPont method is a method for assessing a company's return on equity (ROE) by breaking it down into three parts. The name comes from the DuPont Corporation that started using this formula in the 1920s. 

 

This equation dissects the ROE to tell you how the company is achieving its ROE.

  • Is the company increasing margins?
  • Is the asset turnover adequate?
  • Is leverage being used?

These are the three questions that the DuPont analysis can help you answer.

 

By referencing ROE alone, a company with a ROE of 20% could look like a fantastic opportunity, but when you take a deeper look, it could tell a completely different story.

 

Moreover, this analysis enables the analyst to compare different companies in similar industries or between industries.

MONTHER SALEH AHMAD ALFAURI
par MONTHER SALEH AHMAD ALFAURI , محرر صحفي , قناة البابلية الفضائية

DuPont Analysis is an expression which breaks ROE  parts.

DuPont invented this formula in an internal efficiency report in.

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