Definition

DuPont analysis

A decomposition of return on equity into three levers: how profitable sales are (net margin), how hard assets work (asset turnover), and how much leverage amplifies the result (equity multiplier). Two companies can share an ROE for entirely different reasons — DuPont shows which lever is doing the work.

Formula

ROE = Net margin × Asset turnover × Equity multiplier
    = (Net income ÷ Revenue) × (Revenue ÷ Avg total assets) × (Avg total assets ÷ Avg shareholders' equity)

Drivers — what actually moves it

Net margin: profitability per revenue dollar — the income-statement lever.
Asset turnover: revenue generated per asset dollar — the efficiency lever.
Equity multiplier: assets funded per equity dollar — the leverage lever; it amplifies both directions.

Where to find it in the filing

Income statement + balance sheet. 10-K Item 8 — net income and revenue from the income statement; total assets and shareholders' equity from the balance sheet (average the opening and closing balances).

XBRL concepts Echelon grounds to: NetIncomeLoss · Revenues · Assets · StockholdersEquity

Sector caveats — where this breaks

Banks run structurally high equity multipliers — compare leverage within the sector, not across sectors.
Buybacks shrink equity and mechanically raise ROE with no change in the business; negative equity breaks the ratio entirely.

Drill it in a live lesson Net margin Asset turnover Return on equity Equity multiplier

Drill dupont analysis on another filer

Graded exercises that use this metric — each one against a different company's own filed figures.

NVIDIA's DuPont decomposition: the transfer test Apple's DuPont decomposition: three ratios, one return Airbnb's DuPont decomposition: three ratios, one return Abbott's DuPont decomposition: three ratios, one return Adobe's DuPont decomposition: three ratios, one return Analog Devices' DuPont decomposition: three ratios, one return

Educational use only — not investment advice. Figures come from public SEC filings; Echelon teaches you to analyze data, it never recommends buying or selling any security.