What is DuPont Financial Analysis System? Its core indicator "return on net assets" can be decomposed into several indicators. The decomposition idea of each index?

Dupont financial analysis system is a practical financial analysis system. Starting with the most comprehensive and representative index to evaluate enterprise performance-return on net assets, this paper makes a comprehensive and systematic analysis and evaluation of enterprise financial status and economic benefits by using the internal organic relationship between the main financial ratio indicators.

Dupont's financial analysis and evaluation system takes the net interest rate of equity as the core, which is the most comprehensive and representative index of all ratios. Then the net interest rate of equity is decomposed into net interest rate of sales, asset turnover rate and equity number. After decomposition, we can measure the specific reasons for the fluctuation of the comprehensive index of return on net assets.

Net interest rate of equity = net interest rate of assets * equity multiplier

Net interest rate of assets = net interest rate of sales * asset turnover rate

So: net interest rate of equity = net interest rate of sales * asset turnover rate * equity multiplier.

The net profit rate of sales, asset turnover rate and equity percentage can be obtained from the balance sheet and income statement.

The function of DuPont financial analysis and evaluation system is to explain the reasons and trends of index changes and point out the direction of taking measures.