The use of dupont analysis by market participants mark t. The primary reason for the increase in return on equity ratio roe over 2019 year is the increase in profitability measured by net profit margin ratio. The dupont analysis also called the dupont model is a financial ratio based on the return on equity ratio that is used to analyze a companys ability to increase its return on equity. Analyzing and interpreting financial statements operating income margin widened by a full percentage point to nearly 21%. A study of financial performance using dupont analysis in. The model breaks down roe ratio into three components. The article explains the interpretation of the analysis along with the example. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. In other words, this model breaks down the return on equity ratio to explain how companies can increase their return for investors. Dupont analysis is an equity evaluation approach that uses financial and leverage ratios that expand the profitability ratio of return on equity roe into a. Dupont analysis is a model widely used in financial ratio analysis to designate the ability of a company to increase its return on equity ratio roe. The first two elements together, ros multiplied by asset turnover, form roa, return on assets. Dupont analysis is an extended examination of return on equity roe of a company which analyses net profit margin, asset dupont analysis was developed by the dupont corporation in the year 1920. These two accounting ratios measure different constructs and.