Du Pont Analysis

Business, Legal & Accounting Glossary

Definition: Du Pont Analysis


Du Pont Analysis


Full Definition of Du Pont Analysis


A type of analysis that examines a company’s Return on Equity (ROE) by breaking it into three main components: profit margin, asset turnover and leverage factor. By breaking the ROE into distinct parts, investors can examine how effectively a company is using equity, since poorly performing components will drag down the overall figure. To calculate a firm’s ROE through Du Pont analysis, multiply the profit margin (net income divided by sales), asset turnover (sales divided by assets) and leverage factor (total assets divided by shareholders’ equity) together. The higher the result, the higher the return on equity.


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Definition Sources


Definitions for Du Pont Analysis are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 17th November, 2021 | 0 Views.