DuPont Analysis Calculator

DuPont Analysis Formula

The DuPont analysis formula breaks down Return on Equity (ROE) into three components:

• Net Profit Margin: Net Profit / Total Revenue
• Asset Turnover: Total Revenue / Average Total Assets
• Equity Multiplier: Average Total Assets / Average Total Equity

ROE = Net Profit Margin × Asset Turnover × Equity Multiplier

DuPont Analysis Example

Let's illustrate the DuPont analysis with an example:

Net Profit: $50,000

Total Revenue: $1,000,000

Average Total Assets: $500,000

Average Total Equity: $300,000

By applying the DuPont analysis formula:

• Net Profit Margin: 0.05 (or 5%)
• Asset Turnover: 2.00 (or 200%)
• Equity Multiplier: 1.67 (or 166.67%)
• ROE: 0.167 (or 16.7%)

DuPont Analysis Meaning

DuPont analysis provides insights into the drivers of a company's return on equity (ROE).

By breaking ROE into its component parts—net profit margin, asset turnover, and equity multiplier—it helps assess operational efficiency, asset utilization, and financial leverage.

Understanding these components individually allows for targeted improvements in profitability, efficiency, and risk management, enabling better-informed decision-making by stakeholders.