DuPont Analysis Calculator
DuPont Analysis Results
What Is DuPont Analysis?
DuPont analysis is a financial method that breaks Return on Equity (ROE) into smaller components. ROE tells you how well a company uses shareholders’ money to generate profit.
The problem with ROE alone is that it hides details. Two companies can have the same ROE for very different reasons. DuPont analysis fixes that by showing the drivers behind the number.
At its core, DuPont analysis answers three key questions:
- How profitable is the company?
- How efficiently does it use its assets?
- How much financial leverage does it use?
The Basic DuPont Formula
The basic DuPont formula looks like this:
ROE = Net Profit Margin × Asset Turnover × Equity Multiplier
Each part tells a different story.
1. Net Profit Margin
This shows how much profit the company makes from each dollar of sales.
Formula:
Net Income ÷ Sales
A higher margin means better cost control or stronger pricing power.
2. Asset Turnover
This measures how efficiently the company uses its assets to generate revenue.
Formula:
Sales ÷ Total Assets
Higher asset turnover means the company is doing more with what it owns.
3. Equity Multiplier
This reflects financial leverage.
Formula:
Total Assets ÷ Shareholders’ Equity
A higher number means the company relies more on debt. That can boost ROE, but it also increases risk.
What the DuPont Analysis Calculator Does
The DuPont Analysis Calculator automates all these calculations. Instead of manually working through formulas, you enter financial figures and get instant results with explanations.
The calculator supports two analysis types:
- Basic DuPont Analysis
- Extended DuPont Analysis
You can switch between them using the “Analysis Type” dropdown.
Inputs Explained in Simple Terms
Here is what each input in the calculator means and why it matters.
Net Income
This is the company’s profit after all expenses and taxes. It drives profitability.
Sales / Revenue
This is total income from selling goods or services. It is used to measure efficiency and margins.
Total Assets
Everything the company owns, such as cash, equipment, and property. This affects asset turnover.
Shareholders’ Equity
The owners’ stake in the company. This is used to measure leverage and ROE.
Basic DuPont Analysis Results
Once you click Calculate, the calculator shows:
Return on Equity (ROE)
Displayed as a percentage, this is the final result.
ROE Breakdown
This section explains:
- Net Profit Margin
- Asset Turnover
- Equity Multiplier
Each component includes a short description so you know what it represents.
Component Analysis
This part connects each factor directly to ROE. It helps you see whether profitability, efficiency, or leverage has the biggest impact.
Interpretation
This is one of the most useful features. The calculator:
- Labels ROE as low, average, good, or excellent
- Warns if leverage is high
- Flags weak profitability or poor asset usage
This turns raw numbers into insights.
Extended DuPont Analysis Explained
When you select Extended DuPont Analysis, the calculator adds more depth. It breaks profitability into smaller parts to show where pressure or strength comes from.
Additional Inputs
- EBT (Earnings Before Tax)
- EBIT (Earnings Before Interest and Taxes)
These values allow the calculator to isolate tax and interest effects.
Extended DuPont Formula Components
The extended model breaks net profit margin into three parts:
1. Tax Burden
Net Income ÷ EBT
This shows how much profit remains after taxes. Lower values mean heavier tax impact.
2. Interest Burden
EBT ÷ EBIT
This measures how much interest costs reduce operating income.
3. Operating Margin
EBIT ÷ Sales
This reflects core business efficiency before financing and taxes.
Extended Results Output
When extended analysis is active, the calculator displays:
- Extended ROE breakdown
- Tax burden value
- Interest burden value
- Operating margin percentage
This makes it easier to see whether taxes, debt, or operations are shaping ROE.
Why This Calculator Is Useful
This DuPont Analysis Calculator is more than a math tool. It helps users:
- Compare companies with similar ROE but different risk profiles
- Identify whether growth should focus on margins, efficiency, or capital structure
- Understand how debt and taxes affect shareholder returns
- Turn financial statements into clear insights
It is especially helpful for students, investors, analysts, and business owners.
Practical Example
Suppose a company has a high ROE. At first glance, that looks great. But DuPont analysis may reveal:
- Low profit margins
- Weak asset turnover
- Very high equity multiplier
This means ROE is driven mostly by debt, not strong operations. The calculator highlights this risk instantly through its interpretation section.
Important Limitations to Keep in Mind
- Results depend on accurate financial data
- Industry differences matter when comparing companies
- High ROE is not always good if leverage is excessive
The calculator is best used as a decision-support tool, not a final verdict.