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Dupont analysis application
Applying DuPont Analysis: A Practical Example Using Financial Statements
November 13, 2023
Can you provide an example of how DuPont Analysis is applied to financial statements?
Let's consider a company with an ROE of 15%. DuPont Analysis breaks this down into net profit margin, asset turnover, and equity multiplier. If the net profit margin is 5%, asset turnover is 3, and equity multiplier is 1.5, the ROE formula (Net Profit Margin x Asset Turnover x Equity Multiplier) equals 15%. This example illustrates how DuPont Analysis dissects ROE using information from financial statements to reveal underlying performance drivers.
Tags : DuPont Analysis Application , Financial Ratios , ROE Breakdown