Dupont Flashcards
1
Q
What is the Dupont System
A
it decomposes the ROE
2
Q
what is ROE formula
A
NI / SE
3
Q
what are the different formulas for the Dupont system
A
- Net Profit margin, 2. Asset turnover ratio 3. Leverage
4
Q
what is the formula for Net profit margin
A
NI / REvenue
5
Q
what is the formula for Asset turnover ratio
A
Revenues / TA
6
Q
what is the formula for Leverage
A
TA/ SE
7
Q
what does Net profit margin show
A
how much out of every dollar of sales a company actually keeps in earnings
8
Q
what does Asset turnover show
A
the amount of sales generated per dollar of assets
9
Q
what does leverage show
A
measures how many dollars of total assets are supported by each dollar of shareholder’s equity
