DuPont analysis can be done with net income or operating income figures as long as the related asset base is consistent.

Question

Quizplus · Accepted Answer

DuPont analysis is a tool used to evaluate the financial performance of a company by analyzing the return on equity (ROE). It is a multi-step process that breaks down the ROE into its components, which are the net profit margin, asset turnover ratio, and financial leverage. The formula for ROE is:

ROE = Net Income / Equity

or

ROE = Operating Income / Equity

Therefore, DuPont analysis can be done with either net income or operating income figures as long as the related asset base is consistent.

DuPont Analysis Can Be Done with Net Income or Operating