Corporate Documents: Financial Management: Dupont Analysis

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Financial Management: DuPont Analysis

The DuPont analysis I conduct below will come in handy in the determination of how Wal-Mart and Target are achieving their Return on Equity (ROE). According to Baker and Powell (2009), the DuPont analysis formula can be presented as:

Return on equity = Profit margin * Total asset turnover * Equity multiplier

DuPont Model

Wal-Mart

Target

Net Profit Margin

Asset Turnover

Equity Multiplier

Return on Equity

In regard to Wal-Mart, the increase in ROE was largely as a result of an increase in the asset turnover and equity multiplier. Similarly, the increase in ROE in the case of Target was as a result of an increase in the equity multiplier and asset turnover. Taking into consideration the ROE of both companies, it is clear that the stockholders of Wal-Mart are racking in more profits for each dollar invested in the company. Target however seems to rake in more profits than Wal-Mart per every revenue dollar. This can be gleaned from the net profit margins of both companies. Target's high equity multiplier on the other hand… [END OF PREVIEW]

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"Financial Management: Dupont Analysis."  Essaytown.com.  February 14, 2013.  Accessed July 23, 2019.
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