The DuPont Analysis.

The DuPont analysis is a performance measurement that was created back in the 1920s and has stood the test of time as a simple but powerful way to determine the financial performance of your business.

It is the way for you to convert your profit and loss statement and balance sheet into a meaningful analysis of your Return on Investment (ROI) by demonstrating the return you are generating on your assets and equity. You can then determine what drives that return, and whether you are earning the return you want.

You can download a copy of the DuPont Analysis template here

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It is very simple to use. You just need to enter the following information:

  • Gross revenue
  • Variable expenses
  • Fixed expenses
  • Interest expense
  • Other income
  • Total assets
  • Total liabilities.

The excel worksheet will then calculate your various ratios and confirm your ROI.
Once you perform the analysis on your current numbers, you can then change some numbers around to see what the impact would be if you were to make some amendments to your business.

For instance:

  • What if you increased revenue by two per cent while keeping costs at the same level?
  • What if you reduced expenses by five per cent while maintaining revenue at the same level?
  • What if you reduced interest expense by three per cent?
  • What if you reduced or increased assets by five per cent?

You will see the impact these changes have on your profit margin, your asset turnover and ultimately your return on assets. Now you’re starting to really see where your business is financially and what you need to do to get you to where you want to be.

Again, you can download the excel template here.

Fill the details in Blue columns to calculate