In this video on DuPont Formula, we discuss the formula to calculate DuPont with some practical examples.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐃𝐮𝐏𝐨𝐧𝐭 𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐟𝐨𝐫 𝐑𝐎𝐄?
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The formula of DuPont ROE helps us to understand in detail Return on Equity (ROE).

𝐃𝐮𝐏𝐨𝐧𝐭 𝐅𝐨𝐫𝐦𝐮𝐥𝐚 𝐟𝐨𝐫 𝐑𝐎𝐄
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Return on Equity (ROE) = Profit Margin * Total Asset Turnover * Leverage Factor

𝐄𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐃𝐮𝐏𝐨𝐧𝐭 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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ABC Co. has the following information –

Net Income of Year – $80,000
Revenues of Year – $400,000
Total Assets of Company – $900,000
Shareholders’ Equity – $150,000

Using DuPont Formula we get,

Return on Equity = Profit Margin * Total Asset Turnover * Leverage Factor

OR

Dupont ROE = Net Income / Revenues * Revenues / Total Assets * Total Assets / Shareholders’ Equity

Dupont ROE = $80,000 / $400,000 * $400,000 / $800,000 * $900,000 / $150,000

Dupont ROE = 1/5 * 1/2 * 6 = 1/3 = 60.00%.

To know more about 𝐃𝐮𝐏𝐨𝐧𝐭 𝐅𝐨𝐫𝐦𝐮𝐥𝐚, you can go to this link here:- [ Ссылка ]

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