# Dupont Analysis in Excel or other programm



## Willum (Jun 12, 2008)

Does somebody have or know a Dupont Analysis in Excel?
I tried to make one on my own, but I'm not succeeding in making one 

I searched the internet for this, but I didn't find any to download or something. Only a few which you have to pay for, but these come in with a complete package with specific templates. 

So does anyone know a Dupont Analysis in Excel (or perhaps another programm, but it really needs to work).

Thanks in advance.


----------



## slurpee55 (Oct 20, 2004)

Spreadsheets can be found at these sites - at least some of them are free:
http://cdp.wisc.edu/Dupont.htm
http://www.finance30.com/forum/topics/dupont-analysis-template
http://nmtc.net/search/dupont-analysis-spreadsheet


----------



## Keebellah (Mar 27, 2008)

I had no clue what it was and also came accross this one:
http://www.investopedia.com/terms/d/dupontanalysis.asp


----------



## Pedro15 (Oct 5, 2008)

I use Du pont method as part of analysing a company's performance.

Du Pont was a finacial guru of the past and his method is basically to dissect the make up of Return on Equity (ROE) to see the reason for movement in ROE.

The ingredients needed are

Net Profit 
Annual sales
Total Assets
Shareholders Equity (Total Assets less Total Liabilities)

The steps are
1.Net Profit/Sales 
2. Sales/Assets 
3.Assets/Equity 

When the common numerators and denominators (Sales and Assets) of these three steps are cancelled out, the ratio left is Profit/Equity, which is the normal method of calculating ROE. 

The calculations show 

1.= Profitability (N.P. Margin) 
2.= Productivity (Sales per $1 of assets) 
3.=Capital Structure (method of financing assets) 

When Step 1 is multiplied by Step 2 the result is Return on Assets (ROA) . 
When ROA is multiplied by Step 3 it is the third stage of obtaining a company's ROE. 

So Step 1 * Step 2 = ROA and Step 1 * Step 2 * Step 3 = ROE. 

I like companies that can improve the ratios on a year by year basis in Steps 1 and 2. In other words companies that improve their NP Margin and also Sell more each year for each $1 of Assets. 
Having said that , if ROA (1*2) is increasing that is a GOOD sign, though both increasing is the BEST. 
Some companies may reduce their margins and sell more product (or increase margin but sell less per $1 of assets), and these would be the ones where overall ROA increases (GOOD ones but not the BEST). 

A trap I fell into when first looking at ROE's was that some increased, due only to the influence of Step 3. 
More debt rather than increased margins or sales per $1 of assets . Some companies had falling ROA but increasing ROE due only to the increased debt. 

This is fine until there is a downturn or interest rates rise, with these companies . 

The other important ratio I look at is the Equity Ratio which is the inverse of step 3 above.
It shows how much is financed by shareholders versus that by creditors and banks.

Pedro


----------

