DuPont analysis

DuPont Analysis (also known as the dupont identity, DuPont equation, DuPont Model or the DuPont method) is an expression which breaks ROI (return on investment) into three parts. DuPont Analysis (also known as the dupont identity, DuPont equation, DuPont Model or the DuPont method) is an expression which breaks ROI (return on investment) into three parts. The name comes from the DuPont Corporation that started using this formula in the 1920s. DuPont explosives salesman Donaldson Brown invented this formula in an internal efficiency report in 1912. ROE = (Profit margin)*(Asset turnover)*(Equity multiplier) = (Net profit/Sales)*(Sales/Average Total Assets)*(Average Total Assets/Average Equity) = (Net Profit/Equity) Or Profit/Sales*Sales/Assets=Profit/Assets*Assets/Equity Or ROS*AT=ROA*Leverage=ROE