DuPont Analysis Calculates ROE as the Product of Calculator
Introduction & Importance
DuPont Analysis is a powerful tool used to evaluate a company’s profitability and efficiency. It calculates Return on Equity (ROE) as the product of three key components: Profit Margin, Asset Turnover, and Equity Multiplier.
How to Use This Calculator
- Enter the company’s Net Income, Average Assets, and Average Equity.
- Click the ‘Calculate’ button.
- View the results and chart below.
Formula & Methodology
ROE = Profit Margin * Asset Turnover * Equity Multiplier
Where:
- Profit Margin = Net Income / Revenue
- Asset Turnover = Revenue / Average Assets
- Equity Multiplier = Average Assets / Average Equity
Real-World Examples
Data & Statistics
| Company | ROE | Profit Margin | Asset Turnover | Equity Multiplier |
|---|---|---|---|---|
| Apple | 35.2% | 22.2% | 2.47 | 1.42 |
| Microsoft | 21.8% | 18.3% | 1.19 | 1.84 |
Expert Tips
- Compare a company’s DuPont Analysis results with its industry peers.
- Track changes in ROE components over time to identify trends.
Interactive FAQ
What is DuPont Analysis?
DuPont Analysis is a tool used to evaluate a company’s profitability and efficiency by breaking down its Return on Equity (ROE) into three components.
Why is DuPont Analysis important?
DuPont Analysis helps investors and analysts understand how a company generates its returns and how efficiently it uses its assets and equity.
For more information, see the Investopedia guide and the CFA Institute resources.