DuPont Analysis

The DuPont Analysis is important in determining what is driving a company's ROE. ROE is a
strong measure of how well the management of a company creates value for its
shareholders. Higher ROE is always preferred to lower ROE. This ROE can be increased by a
company only by changing its capital structure without improving its profitability
(profit margin) and operational efficiency (asset turnover). If this is the reason behind the
increasing ROE, it is not a good reason for the investor to be glad of. Because of this reason
only observing the ROE is not a good idea; rather we have to decompose the ROE to
see what factor is actually behind the change in ROE.

Table: Factors affecting the ROE of BRAC Bank, AB Bank and DBBL

Factors affecting the ROE of BRAC Bank

2018 2017 2016

Net Income/EBT 0.66 0.66 0.58
EBT/ EBIT 0.92 0.88 0.82
EBIT/ Sales 0.34 0.43 0.47
Sales/ Total Asset 0.08 0.07 0.06
Total Asset/ Total Equity 13.61 13.21 13.03
ROE 0.22 0.23 0.17
22% 23% 17%
 Factors affecting the ROE of AB Bank

2018 2017 2016

Net Income/EBT 0.06 0.56 0.63
EBT/ EBIT 0.20 0.015 0.44
EBIT/ Sales 0.17 0.28 0.28
Sales/ Total Asset 0.06 0.06 0.006
Total Asset/ Total Equity 13.61 13.21 13.03
ROE 0.0017 0.0019 0.0061
0.17% 0.19% 0.61%

Factors affecting the ROE of DBBL

2018 2017 2016

Net Income/EBT 0.62 0.46 0.55
EBT/ EBIT 0.94 0.93 0.59
EBIT/ Sales 0.34 0.34 0.36
Sales/ Total Asset 0.06 0.05 0.06
Total Asset/ Total Equity 15.00 16.00 14.98
ROE 0.18 0.12 0.10
18% 19% 61%

Comparison between ROE of BRAC, AB and DBBL:

ROE of BRAC bank ROE of AB bank ROE of DBBL
2018 22% 0.17% 18%
2017 23% 0.19% 19%
2016 17% 0.61% 61%
 Comparison between ROE of BRAC, AB and
DBBL
70%
60%
2018
50% 2017
40% 2016

30%
20%
10%
0%
ROE of BRAC bank ROE of AB bank ROE of DBBL