Saturday, July 2, 2011

Re: [ vuZs.net ] Doupont Return on Asset Ration Ratio Interpretation

DuPont Identity

An expression that breaks return on equity (ROE) down into three parts: profit margin, total asset turnover and financial leverage. It is also known as "DuPont Analysis".

DuPont identity tells us that ROE is affected by three things: 
  • Operating efficiency, which is measured by profit margin
  • Asset use efficiency, which is measured by total asset turnover
  • Financial leverage, which is measured by the equity multiplier

ROE = Profit Margin (Profit/Sales) * Total Asset Turnover (Sales/Assets) * Equity Multiplier (Assets/Equity) 

We calculate DuPont Return on Assets just because of the sales comparisons with net income and assets. 

Note: The term "Du Pont aAnalysis"  is generally used for "ROE" and "ROA" is part of that analysis.

Regards
Umeed





On Sat, Jul 2, 2011 at 6:20 PM, mc090401911 Muhammad Arshad <mc090401911@vu.edu.pk> wrote:
your Formula is correct but i want to know what Dupont Return on Assets tell us ??????
interpretation

On Sat, Jul 2, 2011 at 4:26 AM, mc090405738 Naima Sammad <mc090405738@vu.edu.pk> wrote:

DuPont Return on Assets = (Net Income / Sales) x (Sales / Total Assets)*100

--
--
Please visit www.vuzs.net For Current & Old Papers, Quizzes, Assignments and study material.
--
You received this message because you are subscribed to the Google
Groups "vuZs" group.
--
To post a new message on this group, send email to vuZs@googlegroups.com
--
Message Posting Rules: http://vuzs.net/faq/4795-vuzs-google-groups-basic-rules-for-posting-messages.html
--
To unsubscribe from this group, send email to vuZs+unsubscribe@googlegroups.com
--
To join this group Send blank email from your virtual university email address to
vuZs+subscribe@googlegroups.com
or visit
http://groups.google.com/group/vuZs/subscribe
---
For more information Contact vuZs Manager at info@vuzs.net

--
--
Please visit www.vuzs.net For Current & Old Papers, Quizzes, Assignments and study material.
--
You received this message because you are subscribed to the Google
Groups "vuZs" group.
--
To post a new message on this group, send email to vuZs@googlegroups.com
--
Message Posting Rules: http://vuzs.net/faq/4795-vuzs-google-groups-basic-rules-for-posting-messages.html
--
To unsubscribe from this group, send email to vuZs+unsubscribe@googlegroups.com
--
To join this group Send blank email from your virtual university email address to
vuZs+subscribe@googlegroups.com
or visit
http://groups.google.com/group/vuZs/subscribe
---
For more information Contact vuZs Manager at info@vuzs.net

--
--
Please visit www.vuzs.net For Current & Old Papers, Quizzes, Assignments and study material.
--
You received this message because you are subscribed to the Google
Groups "vuZs" group.
--
To post a new message on this group, send email to vuZs@googlegroups.com
--
Message Posting Rules: http://vuzs.net/faq/4795-vuzs-google-groups-basic-rules-for-posting-messages.html
--
To unsubscribe from this group, send email to vuZs+unsubscribe@googlegroups.com
--
To join this group Send blank email from your virtual university email address to
vuZs+subscribe@googlegroups.com
or visit
http://groups.google.com/group/vuZs/subscribe
---
For more information Contact vuZs Manager at info@vuzs.net
Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)