DuPont equation
DuPont equation is a formula showing that the rate of return on equity can be found as the profit margin multiplied by the product of total assets turnover and the equity multiplier.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- DuPont equation. A formula showing that the rate of return on equity can be found as the profit margin multiplied by the product of total assets turnover and the equity multiplier.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- DuPont equation. A formula that shows that the rate of return on equity can be found as the product of profit margin, total assets turnover, and the equity multiplier. It shows the relationships among asset management, debt management, and profitability ratios.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
