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DuPont Analysis Formula

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Return on Equity (ROE) is a measure of profitability that calculates how many dollars of profit a company generates with each dollar of shareholders' equity. Check FAQs

ROE = (\frac{NI}{R}) \cdot (\frac{R}{ATA}) \cdot (\frac{ATA}{ATE})

ROE - Return on Equity?NI - Net Income?R - Revenue?ATA - Average Total Assets?ATE - Average Total Equity?

DuPont Analysis Example

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Here is how the DuPont Analysis equation looks like with Values.

Here is how the DuPont Analysis equation looks like with Units.

Here is how the DuPont Analysis equation looks like.

100 = (\frac{200000}{10000}) \cdot (\frac{10000}{1000}) \cdot (\frac{1000}{2000})

100 = (\frac{200000}{10000}) \cdot (\frac{10000}{1000}) \cdot (\frac{1000}{2000})

100 = (\frac{200000}{10000}) \cdot (\frac{10000}{1000}) \cdot (\frac{1000}{2000})

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DuPont Analysis Solution

Follow our step by step solution on how to calculate DuPont Analysis?

FIRST Step Consider the formula

ROE = (\frac{NI}{R}) \cdot (\frac{R}{ATA}) \cdot (\frac{ATA}{ATE})

Next Step Substitute values of Variables

∴

ROE = (\frac{200000}{10000}) \cdot (\frac{10000}{1000}) \cdot (\frac{1000}{2000})

Next Step Prepare to Evaluate

∴

ROE = (\frac{200000}{10000}) \cdot (\frac{10000}{1000}) \cdot (\frac{1000}{2000})

LAST Step Evaluate

∴

ROE = 100

DuPont Analysis Formula Elements

Variables

Return on Equity

Return on Equity (ROE) is a measure of profitability that calculates how many dollars of profit a company generates with each dollar of shareholders' equity.

Symbol: ROE

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Return on Equity

Net Income

Net income is a company's total earnings.

Symbol: NI

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Net Income

Revenue

Revenue is the income that a business has from its normal business activities, generally from the sale of goods and services to customers.

Symbol: R

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Revenue

Average Total Assets

Average Total Assets is a financial metric that represents the average value of a company's total assets over a specific period of time.

Symbol: ATA

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Average Total Assets

Average Total Equity

Average Total Equity is a financial metric that represents the average value of a company's total equity over a specific period of time.

Symbol: ATE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Average Total Equity

Other formulas in Basics of Financial Accounting category

Go Discount Percentage

D% = (\frac{LP - SP}{SP}) \cdot 100

Go Depletion Charge per Unit

DC = \frac{OC - RV}{n Depletion}

Go Shareholders' Equity given Total Assets and Liabilities

TSE = TA - TL

Go Shareholders' Equity given Share Capital, Retained Earnings and Treasury Shares

TSE = SC + RE - TS

How to Evaluate DuPont Analysis?

DuPont Analysis evaluator uses Return on Equity = (Net Income/Revenue)*(Revenue/Average Total Assets)*(Average Total Assets/Average Total Equity) to evaluate 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 evaluate DuPont Analysis using this online evaluator? To use this online evaluator for DuPont Analysis, enter Net Income (NI), Revenue (R), Average Total Assets (ATA) & Average Total Equity (ATE) and hit the calculate button.

FAQs on DuPont Analysis

What is the formula to find DuPont Analysis?

The formula of DuPont Analysis is expressed as Return on Equity = (Net Income/Revenue)*(Revenue/Average Total Assets)*(Average Total Assets/Average Total Equity). Here is an example- 100 = (200000/10000)*(10000/1000)*(1000/2000).

How to calculate DuPont Analysis?

With Net Income (NI), Revenue (R), Average Total Assets (ATA) & Average Total Equity (ATE) we can find DuPont Analysis using the formula - Return on Equity = (Net Income/Revenue)*(Revenue/Average Total Assets)*(Average Total Assets/Average Total Equity).

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DuPont Analysis Formula

DuPont Analysis Example

DuPont Analysis Solution

DuPont Analysis Formula Elements

Other formulas in Basics of Financial Accounting category

How to Evaluate DuPont Analysis?

FAQs on DuPont Analysis

Variable Name