Dupont Analysis

It is type of analysis that examines a company's Return on Equity (ROE) by breaking it into three main components: profit margin, asset turnover and leverage factor. By breaking the ROE into distinct parts, investors can examine how effectively a company is using equity, since poorly performing components will drag down the overall figure. To calculate a firm's ROE through Du Pont analysis, multiply the profit margin (net income divided by sales), asset turnover (sales divided by assets) and leverage factor (total assets divided by shareholders' equity) together. The higher the result, the higher the return on equity.

Return on equity = profit margin * asset turnover * equity multiplier (Net income/equity) = (net income/sales) *(sales/total assets)* (total assets/equity) Table 18 Dupont Analysis
Company/Year India Cements Ultra Tech Cements Madras Cements ACC Cements JK Cements 2011
0.22 5.12 8.86 5.96 0.92

2010
1.15 8.78 14.86 8.55 3.23

2009
1.53 7.85 15.27 6.46 2.04

2008
2.26 8.09 34.31 7.66 3.79

2007
2.17 6.28 25.50 6.57 2.55

Chart 18 Dupont Analysis

Dupont Analysis
40 35 30 25 20 15 10 5 0 2011 2010 2009 2008 2007 India Cements Ultratech Cements Madras Cements ACC JK Cements

Interpretation:
The above Chart shows According to Dupont the Madras Cement has High return on equity it indicate that the company effectively utilize its equity and generating high returns. And India Cements , JK Cements has low return on equity