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Du Pont Analysis: Himanshu Bahl

Also known as Du Pont Identity Du Pont Equation Du Pont Model Du Pont Method Pioneered by DU PONT Company of United States It is a system of financial analysis which received wide spread recognition and acceptance It was developed by DU PONT company for analyzing and controlling financial performance

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Himanshu Bahl
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160 views9 pages

Du Pont Analysis: Himanshu Bahl

Also known as Du Pont Identity Du Pont Equation Du Pont Model Du Pont Method Pioneered by DU PONT Company of United States It is a system of financial analysis which received wide spread recognition and acceptance It was developed by DU PONT company for analyzing and controlling financial performance

Uploaded by

Himanshu Bahl
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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DU PONT ANALYSIS

Himanshu Bahl
1. Also known as
a) Du Pont Identity
b) Du Pont Equation
c) Du Pont Model
d) Du Pont Method
2. Pioneered by DU PONT Company of United States
3. It is a system of financial analysis which received wide
spread recognition and acceptance
4. It was developed by DU PONT company for analyzing and
controlling financial performance
5. It is an expression which breaks Return on Equity into three
parts :
a) Profitability (Measured by Profit Margin)
b) Operating Efficiency (Measured by Asset Turnover)
c) Financial Leverage (Measured by Equity Multiplier)



Profit Margin
Profit Margin = Net Profit
Sales
Net Profit = Net Sales Total Cost

Cost of Goods Sold = xxx
Operating Expenses = xxx
Interest and Taxes = xxx
Total Cost = xxx

Asset Turnover
Asset Turnover = Net Sales
Total Assets

Total Assets = Current Assets + Fixed Assets

Inventory = xxx
Accounts Receivables = xxx
Cash and Bank Balance = xxx
Current Assets = xxx

Equity Multiplier
Equity Multiplier = Assets
Shareholders Equity

Return on Equity
Return on Equity = Net Profit Margin X Asset Turnover X Equity Multiplier

Return on Equity = Net Profit Sales Assets
Sales Assets Shareholders Equity
Return on Equity = Net Profit (or Profit after Tax)
Shareholders Equity

6. Helps in understanding How the net Return on
Investment is influenced by the Net Proft Margin
and Total Asset Turnover Ratio



Return on Investment
Return on Investment = Net Profit Margin X Asset Turnover

DU PONT CHART



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http://icwai.org/studies/Fin_Managt.aspx
http://financenmoney.in/roi-and-the-du-pont-analysis/
http://www.investopedia.com/terms/e/equitymultiplier.asp
http://www.investopedia.com/terms/r/returnonequity.asp
http://en.wikipedia.org/wiki/DuPont_analysis
http://www.financeformulas.net/Equity_Multiplier.html
http://www.slideshare.net/rivalheart20/du-pont-presentation
http://www.slideshare.net/rivalheart20/du-pont-presentation
http://www.slideshare.net/jennna/du-pont-analysis
http://www.slideshare.net/VinitKhushalani/du-pont-analysis-
19013960
http://en.wikipedia.org/wiki/Earnings_before_interest_and_taxes
http://en.wikipedia.org/wiki/Leverage_%28finance%29

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