DuPont Dairy Farm - * ROA > Loan interest rates is competitive
* ROA = Net Income / Total Assets
* Leverage Multiplier = Total Assets / Owner Equity
* Taking on additional loans would change Total Assets but keep Owner Equity same
-- Allows expansion
DuPont Decomposition Components - * Net ...
* Leverage Multiplier = Total Assets / Owner Equity
* Taking on additional loans would change Total Assets but keep Owner Equity same
-- Allows expansion
DuPont Decomposition Components - ✔✔* Net Profit Margin
* Total Asset Turnover
* Leverage Multiplier
DuPont Equation - ✔✔* Return on Equity is a function of:
-- Operating efficiency
-- Asset efficiency
-- Financing policy
* Decomposition of Return on Equity
DuPont Equation Purpose - ✔✔* Return on all investors measured by company's profitability and asset
usage efficiency
* Effect of debt appears only of ROE
DuPont Framework - ✔✔* Decomposes Return on Equity by analyzing which activities contribute to
ROE changes
DuPont Leverage Multiplier - ✔✔* Ratio lower than industry norm indicated company is more
conservatively financed
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