Calculate a complete DuPont analysis calculating the ROE, ROA, the profit margin, total asset turnover and equity multiplier.

DuPont is a financial analysis tool for analyzing the Return on Equity (ROE). The ROE is divided into three parts: the profit margin, asset turnover total and equity multiplier. The first step in calculating these factors is to determine the net income which is calculated as follows: Net Income = Total Revenues – Total Expenses.

Next, divide net income by the total revenue and express this as a percent. Total asset turnover is determined by dividing the total revenue by all assets. Finally, the equity multiplier can be found by dividing total assets by shareholders’ equity.

ROE is calculated by using this formula: ROE = Total Asset Turnover + Equity Multiplier. Return on Assets (ROA) is another useful metric that can be used to measure the efficiency of a firm’s resources. The ROA takes both profit and efficiency into consideration and calculates as: Net Income/Total Assets.

Understanding each DuPont Analysis component will help us make informed decisions which ultimately lead to the success of any business or organization.