Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Define DuPont analysis
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Step 1
If we want to know the strengths and weaknesses of a company DuPont analysis is an excellent technique. At regular intervals, the financial ratio used in the model can be decomposed to get a deeper insight into the source of weakness. When sources of weakness are identified, with the DuPont analysis management can take some actions (e.g., improve expense control, asset management, or marketing) to improve the return on equity ratio.
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