What is DuPont Analysis?
DuPont analysis is a financial ratio analysis framework that decomposes the return on equity (ROE) into various components to assess the factors driving a company's profitability. It is a fundamental tool used in financial analysis to evaluate the sources of a company's profitability and to identify areas where management can improve performance.
DuPont analysis falls under the category of financial analysis or financial management within the field of finance. It is commonly used by analysts, investors, and managers to understand the underlying drivers of a company's financial performance. By breaking down ROE into its components such as profit margin, asset turnover, and financial leverage, DuPont analysis provides insights into how efficiently a company is using its resources to generate profits and create value for shareholders.
In summary, while DuPont analysis is a specific analytical technique, it is used within the broader field of financial analysis and falls under the purview of financial managemen
How to Calculate DuPont Analysis?
DuPont Analysis calculator uses Return on Equity = (Net Income/Revenue)*(Revenue/Average Total Assets)*(Average Total Assets/Average Total Equity) to calculate the Return on Equity, The DuPont Analysis formula is defined as a financial ratio analysis framework that decomposes the return on equity into various components to assess the factors driving a company's profitability. Return on Equity is denoted by ROE symbol.
How to calculate DuPont Analysis using this online calculator? To use this online calculator for DuPont Analysis, enter Net Income (NI), Revenue (R), Average Total Assets (ATA) & Average Total Equity (ATE) and hit the calculate button. Here is how the DuPont Analysis calculation can be explained with given input values -> 100 = (200000/10000)*(10000/1000)*(1000/2000).