Return on assets Du Pont

Return on Assets Du Pont is a financial ratio that shows how the return on assets depends on both asset turnover and profit margin. The Du Pont method breaks out these two components from the return on assets ratio in order to determine the impact of each on the profitability of the company.

Return on assets Du Pont can be expressed as:

:ROA Du Pont = (Net income / Sales) x (Sales / Total Assets)

This ratio helps to highlight the impact of changes in asset turnover and profit margin. [ [http://www.college-cram.com/study/finance/presentations/112 Professor Cram. "Ratios of Profitability: Return on Assets Du Pont" College-Cram.com. 14 May 2008 ] ]

References


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