3 Step DuPont Analysis for ROE | Financial Statement Analysis
10.3 هزار بار بازدید -
3 سال پیش
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The 3-step DuPont Analysis disaggregates
The 3-step DuPont Analysis disaggregates return on equity (ROE) into 3 components:
ROE = profit margin * asset turnover * equity multiplier
Profit margin and asset turnover both pertain to the company's operations, whereas the equity multiplier is a measure of leverage that pertains to the company's financing decisions.
Increasing the company's leverage can increase ROE if the company is doing well, as the company can borrow money and earn a higher return than the cost of borrowing. In bad times, however, increased leverage can be a bad thing, as the company needs to continue making interest payments even if it is losing money. Thus, leverage makes good situations better and bad situations worse.
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ROE = profit margin * asset turnover * equity multiplier
Profit margin and asset turnover both pertain to the company's operations, whereas the equity multiplier is a measure of leverage that pertains to the company's financing decisions.
Increasing the company's leverage can increase ROE if the company is doing well, as the company can borrow money and earn a higher return than the cost of borrowing. In bad times, however, increased leverage can be a bad thing, as the company needs to continue making interest payments even if it is losing money. Thus, leverage makes good situations better and bad situations worse.
—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world.
—
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES AND SPREADSHEETS
* http://eepurl.com/dIaa5z
—
SUPPORT EDSPIRA ON PATREON
*Patreon: prof_mclaughlin
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
* https://edspira.thinkific.com
—
LISTEN TO THE SCHEME PODCAST
* Apple Podcasts: https://podcasts.apple.com/us/podcast...
* Spotify: https://open.spotify.com/show/4WaNTqV...
* Website: https://www.edspira.com/podcast-2/
—
GET TAX TIPS ON TIKTOK
* TikTok: prof_mclaughlin
—
ACCESS INDEX OF VIDEOS
* https://www.edspira.com/index
—
CONNECT WITH EDSPIRA
* Facebook: Facebook: Edspira
* Instagram: Instagram: edspiradotcom
* LinkedIn: LinkedIn: edspira
—
CONNECT WITH MICHAEL
* Twitter: Twitter: Prof_McLaughlin
* LinkedIn: LinkedIn: prof-michael-mclaughlin
—
ABOUT EDSPIRA AND ITS CREATOR
* https://www.edspira.com/about/
* https://michaelmclaughlin.com
3 سال پیش
در تاریخ 1400/03/13 منتشر شده
است.
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