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  • Overview of Dupont Analysis: Net Profit - Net Sales - Net Profit Margin

    Încărcat de

    Abdullah Al-Otaibi
    20 vizualizări4 pagini
    The document provides an overview and formulas for calculating common financial ratios used in DuPont analysis. These include profitability ratios like net profit margin and asset turnover ratios like total asset turnover. It also includes liquidity ratios like current ratio, leverage ratios like debt-to-equity, and shows how financial leverage can impact return on assets and return on equity through an example comparing two companies with the same sales and profits but different debt levels.

    Descriere originală:

    DuPontAnalysis

    Titlu original

    Dupont Analysis

    Drepturi de autor

    © Attribution Non-Commercial (BY-NC)

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    PDF, TXT sau citiți online pe Scribd

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    The document provides an overview and formulas for calculating common financial ratios used in DuPont analysis. These include profitability ratios like net profit margin and asset turnover ratios like total asset turnover. It also includes liquidity ratios like current ratio, leverage ratios like debt-to-equity, and shows how financial leverage can impact return on assets and return on equity through an example comparing two companies with the same sales and profits but different debt levels.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    20 vizualizări4 pagini

    Overview of Dupont Analysis: Net Profit - Net Sales - Net Profit Margin

    Încărcat de

    Abdullah Al-Otaibi
    The document provides an overview and formulas for calculating common financial ratios used in DuPont analysis. These include profitability ratios like net profit margin and asset turnover ratios like total asset turnover. It also includes liquidity ratios like current ratio, leverage ratios like debt-to-equity, and shows how financial leverage can impact return on assets and return on equity through an example comparing two companies with the same sales and profits but different debt levels.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    din 4

    Overview of DuPont Analysis

    1--1

    Net profit __ Net Sales -I-t

    t--

    Total expenses

    Net profit margin

    +
    Accounts receivable

    Other current l-assets

    n
    I

    Total current
    assets

    I
    11

    I Net sales
    Total assets

    I
    __

    x
    Asset
    turnover Financial leverage

    Return on Net Worth

    +
    Fixed assets

    r--

    Guide to calculation of financial ratios


    ProfitabiHty ratios: Formula Net income Net sales Gross margin Net sales Asset uitilization ratios: Formula Net sales Total assets Net sales .Fixed assets COGS Inventory
    365

    Net margin (return on sales)

    Total asset 'turnover

    Gross margin (%)

    Fixed asset turnover

    Operating margin (%)

    Operating income Net sales

    Inventory turnover

    Days cost of sales in inventory

    Inventory turnover

    G,uide to calculation of tinanclal ratios


    Asset utilization ratios (continued): Formula Liquidity ratios: Formula Current assets (CA) Current liabilities (CL) Cash,+MS+A/R Current liabilities Formula Assets Owner's equity Total debt Total assets Net income Total assets - CL

    Accounts receivable turnover

    Net sales Accounts receivable

    Current ratio

    Add test (quick ratio) Days of sales in accounts receivable Accounts receivable Sales per day

    Leverage ratios:

    Days cost of sales in


    payables

    Accounts
    COGS

    payab:le per day

    Assets/equity Total liabilities to assets Other: Return on capital

    Impact of financial leverage on key ratios

    Company Total Assets Current Assets Current Liabilities Debt Equity Sales PBIT Interest@15% PBT Tax@20% PAT RoA RoE Asset Turnover (S/A) Financial Leverage (AlE)

    1,000 500 500 0 500 2,000 200 0 200 40 160 16% 32% 2.0 2.0

    1,000 500 500 300 200 2,000 200 30 170 34


    136

    13.6% 68% 2.0 5.0

    Companies A and B have the same sales and operating profit, but very different leverage (A has no debt, B has high debt). DuPont analysis shows this in terms of RoA (higher for A, since there is no interest) and RoE (higher for B, since the equity is a much smaller percentage of the Equity plus Liabilities total).

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