DuPont Analysis Calculator: 3-Step & 5-Step ROE Breakdown

Financial Statement Figures

Total Revenue (Sales)

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Net Profit After Tax (PAT)

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Total Assets

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Shareholders' Equity

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Understanding 3-Step DuPont Formula (2026)

DuPont Analysis isolates whether a business creates high returns via high pricing margins, operational volume turnover, or heavy debt.

DuPont Component	Formula	Business Driver
Net Profit Margin	Net Income / Revenue	Pricing power & operational cost efficiency
Asset Turnover Ratio	Revenue / Total Assets	Volume velocity & asset utilization efficiency
Financial Leverage	Total Assets / Equity	Debt capitalization ratio

3-Step DuPont ROE Decomposition Formula

Net Profit Margin (Profitability): Net Income / Revenue. Measures pricing power and operational cost control.
Asset Turnover (Efficiency): Revenue / Total Assets. Measures how fast assets generate top-line sales volume.
Financial Leverage (Debt Multiplier): Total Assets / Equity. Measures debt reliance in capital structure.

Spotting Quality ROE vs Debt-Inflated Value Traps

Quality High ROE: Driven by high profit margins (>15%) and fast asset turnover (>1.5x) with low financial leverage (<1.5x).
Risky Debt ROE: High ROE driven purely by sky-high financial leverage (>3.5x) with thin margins (<5%). High bankruptcy risk!

DuPont Stock Screening Tip

Retail FMCG companies achieve high ROE via fast Asset Turnover, while software firms achieve high ROE via steep Profit Margins. Know your sector's DuPont driver!

Frequently Asked Questions

What is DuPont Analysis?

DuPont Analysis is a financial framework that breaks down Return on Equity (ROE) into three component drivers: Net Profit Margin, Asset Turnover, and Financial Leverage.

What is the 3-Step DuPont Formula?

Formula: ROE = (Net Income / Revenue) * (Revenue / Total Assets) * (Total Assets / Shareholders' Equity).

Why is DuPont Analysis valuable for stock investors?

It exposes whether a company's high ROE is driven by superior operating margins (pricing power), high asset velocity (efficiency), or dangerous debt leverage.

What is Financial Leverage Multiplier?

Financial Leverage Multiplier = Total Assets / Shareholders' Equity. A ratio significantly above 2.5x indicates high reliance on debt financing.

What is Asset Turnover Ratio?

Asset Turnover = Total Revenue / Total Assets. It measures how many rupees of revenue a company generates for every rupee of assets owned.

What is Net Profit Margin in DuPont Analysis?

Net Profit Margin = Net Income / Total Revenue. It reflects pricing power, cost control, and operational efficiency.

What is 5-Step DuPont Analysis?

5-Step DuPont further breaks Net Margin into Tax Burden * Interest Burden * Operating Margin (EBIT Margin) * Asset Turnover * Financial Leverage.

How to spot a risky high-ROE stock using DuPont model?

If a company has thin net profit margins (<5%) and low asset turnover (<0.8x), but a sky-high leverage ratio (>4x), its high ROE is fueled by dangerous debt leverage.

DuPont Analysis Calculator (2026)