Du Pont analysis
Not what you're looking for?
On Page 797 of the Brealey textbook, Brealey discusses how the Dupont System links Return on Assets (ROA) and Return on Equity (ROE) ratios with other financial ratios in useful ways. Describe and explain some of the useful links developed by Dupont System for linking ROA and ROE with other financial ratios. Can you explain how the ratio "asset/equity" can be calculated? This is a graduate level discussion question and must be between 200-300 words.
Purchase this Solution
Solution Summary
This provides the steps for Du Pont analysis
Solution Preview
Return on Equity= Net Income/ Common Equity
Return on assets= Net Income/ Total Assets
Du Pont analysis is an extremely useful way of seeing how the various ratios determined a firm's profitability. The extended Du Pont equation is particularly useful:
ROE = Profit Margin x Total Assets Turnover x Equity Multiplier
= Net ...
Purchase this Solution
Free BrainMass Quizzes
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.