DuPont analysis

The decomposition of ROE as the product of other financial ratios  to evaluate the drivers of ROE.

ROE = Net incomeAvg total assets×Avg total assetsAvg total equity

ROE = Net incomeRevenue×RevenueAvg total assets×Avg total assetsAvg total equity

ROE = Net incomeEBT×EBTEBIT×EBITRevenue×RevenueAvg total assets×Avg total assetsAvg total equity

ROE = Tax burden x Interest burden x EBIT margin x Total asset turnover x Financial leverage

Also Known As:
DuPont system of analysis
« Back to Index