Dopont Model Analysis
Introduction Du-pont is very useful and helpful tool for manager, investors, and analyst that is created in 1920s by American Chemical Manufacturing Giant, Dupont Corporation for the purpose analyzing operation efficiency in the organization. Du-pont analysis is an extended examination of Return on Equity (ROE) of a company which analysis Net Profit Margin, Assets Turnover, and Financial Leverage or Equity Multiplier Ratio. In simple words, it breaks down the ROE to analyze how corporate can increase the return for their shareholders. Net Profit Margin is related to Profitability Ratio Total Assets Turnover is related to Efficiency Ratio Equity Multiplier is related to Leverage Ratio Derivation of Du-pont Model Components of Du-Pont Analysis The following are the five components of Du-Pont Analysis listed as bellows: Net profit Margin Ratio: It compares total net profit to total sales. It measures the profitability ratio of the company. Total Assets Turnover Ratio: It compares tota