Concept of DuPont Analysis

DuPont analysis is a classic method used to evaluate the profitability of a company and the level of return on shareholders' equity, using the relationship between several major financial ratios to comprehensively analyze the financial position of the enterprise. This analysis method was first used by DuPont in the United States, so it is called DuPont analysis.

DuPont Analysis breaks down the return on net assets into profitability, total asset turnover and financial leverage. It helps corporate management to see more clearly the determinants of ROA, and the interrelationships between net sales margin, total asset turnover, and debt ratios, providing management with a clear roadmap for examining the efficiency of the company's asset management and whether to maximize shareholders' return on investment.