Financial Analysis: Du Pont Analysis

The Du Pont Analysis is a type of ratio analysis that allows us to drill down into return on equity to better understand what is driving the results. The basic Du Pont formulas are Return on Assets, times the equity multiplier equals return on equity. You can see the results from the examples in the Return on Assets, Equity Multiplier, and Return on Equity videos. So Du Pont analysis allows us to analyze return on equity as a result of a company’s assets and leverage. Finally, we can look even deeper with the Du Pont formulas because return on sales times asset turnover equals return on assets. So Du Pont analysis allows us to analyze return on equity as a result of a company’s sales, assets management, and leverage policies..

test attribution text

Add Comment