Du Pont Analysis

Du Pont Analysis - Du Pont analysis is specific instrument to examine and evaluate a company's return on equity This is important because poor performance on the company's return on equity, will lower the return for the shareholders. The Return on equity (ROE) is conceived by breaking it down into the categories. Leverage, ( how well the company is using its borrowed money) asset turnover, (net sales , divided by total assets)and profit margin.(net profit divided by sales, after taxes) The Du Pont Analysis is conceived by multiplying the profit margin leverage, and asset turnover and divided by the number of shareholders.. The greater the number will result in a higher return on the shareholders equity.