DuPont

Definition

DuPont Analysis is a financial ratio based on the return on equity (ROE) formula that evaluates a company's ability to increase its return on equity by analyzing profit margin, asset turnover, and financial leverage. This technique breaks down the components of the ROE formula to identify strengths and weaknesses in different areas of a business's operations.

Related terms

Return on Equity (ROE): A measure of financial performance calculated by dividing net income by shareholders' equity.

Profit Margin: The ratio of a company’s net income divided by its revenue, indicating how much profit is generated from sales.

Asset Turnover: A financial ratio that measures the efficiency of a company’s use of its assets in generating sales revenue