DuPont ROE Analysis - Meaning, Formula, Calculation & Interpretations

This tutorial will walk you through the DuPont ROE concept from scratch, including the formula, step-by-step calculations, and interpretation. Following that, we will use the Colgate Case Study to calculate and interpret the DuPont ROE in Excel. You can download the Colgate DuPont ROE template from this link - https://www.wallstreetmojo.com/ratio-...

What is DuPont ROE?
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The DuPont Formula, developed by the DuPont Corporation in 1920, divides Return on Equity (ROE) into three parts: Profit Margin, Total Asset Turnover, and Leverage Factor. Investors and financial analysts widely use it to determine how a firm generates its return on shareholders’ equity.

Formula
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DuPont ROE Formula = Profit Margin * Total Asset Turnover * Leverage Factor

Uses
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- DuPont ROE helps investors determine how effectively a firm uses its resources and how leveraged it is.
- The correlation between net income and shareholders' equity is clearly highlighted by DuPont ROE.

For more details, you can refer to our article - https://www.wallstreetmojo.com/dupont...
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