Extended Dupont Equation. Formally the extended dupont formula is. Ehrhardt chapter 3 problem 8mc.
We have step by step solutions for your textbooks written by bartleby experts. This formula is known by many other names including dupont analysis dupont identity the dupont model the dupont method or the strategic profit model. The dupont equation.
This formula is known by many other names including dupont analysis dupont identity the dupont model the dupont method or the strategic profit model.
The roe based on 5 stage dupont calculation is also 12 50 however now we know that the roe is largely contributed by the net profit margin. Dupont decomposition of return on equity roe identifies the drivers of a company s roe in terms of ebit margin interest burden tax burden total asset turnover ratio and financial leverage ratio. Roe net profits sales x sales average assets x average assets average equity here again the expanded dupont equation provides insights into a company s profit margins which tells the analyst how efficiently a company is operated. Textbook solution for corporate finance.
