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DUPONT EQUATION:
Combines a firms profitability, asset efficiency and use of debt.
ROA = Profit Margin (NI/Sales) x Total Assets Turnover (Sales/TA)
Equity Multiplier = Total Assets/Common Equity high leverage have high equity multiplier
ROE = ROA x Equity Multiplier
DUPONT = ROE = Profit Margin (NI/Sales) x Total Assets Turnover (Sales/TA) x Equity Multiplier (TA/CE)