Beautiful Dupont Financial Model
This formula is known by many other names including DuPont analysis DuPont identity the DuPont model the DuPont method or the strategic profit model.
Dupont financial model. The function of DuPont model in this is that it is used as a tool to provide an overview of financial statement analysis for the purposes as stated and also provide a focus for such analysis. The Dupont analysis looks at three main components of the ROE ratio. In the DuPont equation ROE is equal to profit margin multiplied by asset turnover multiplied by financial leverage.
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Profit margin asset turnover and financial leverage. However it is different in how the ratios are diagnostically used. Agricultural Finance Review 64 175-89.
It breaks down the return on equity ratio to explain how companies can increase their return for investors. DuPont analysis also known as the DuPont identity DuPont equation DuPont framework DuPont model or the DuPont method is an expression which breaks ROE return on equity into three parts. In order to assess the financial health of a firm from the perspective of an insider or an outsider there are four major areas that are covered.
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Get more accurate data. ROCE Return on capital employed. Gain a competitive advantage.