What is DuPont analysis?

DuPont breaks ROE into: Net Margin × Asset Turnover × Equity Multiplier — analyzing profitability, efficiency, and leverage separately.

What ROE is excellent?

ROE > 20% = excellent, 10-20% = moderate, < 10% = low.

Decompose ROE into three drivers: profitability, efficiency, and leverage.

Net Profit Margin (%)

Asset Turnover (x)

Equity Multiplier

ROE = -- × -- × -- = --

Net Margin

Profitability

Turnover

Efficiency

Leverage

Financial Risk

ROE = --

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