DuPont Analysis: Definition, Benefits and How to Calculate
The DuPont Analysis is a framework used to analyze a company’s financial performance through an examination of its return on equity (ROE).
The DuPont Analysis reduces ROE down into three components – net profit margin, total asset turnover and financial leverage – to arrive at an overall percentage score.
Also referred to as the DuPont model or identity, the DuPont method or the strategic profit model, this framework was developed by the DuPont Corporation in the 1920s.
It is a well-respected formula used by company financial managers, independent financial advisors and investors alike.
