DuPont ROE Calculator
Break return on equity into its three DuPont drivers — net margin, asset turnover and financial leverage — to see what really powers returns.
How it works
ROE = net profit margin × asset turnover × equity multiplier · = (net income ÷ revenue) × (revenue ÷ assets) × (assets ÷ equity)
The DuPont analysis splits return on equity into three levers so you can see where returns come from: how profitable each sale is (net margin), how efficiently assets generate sales (asset turnover), and how much debt magnifies the result (equity multiplier). Two companies can post identical ROE for very different reasons — one on fat margins, another on heavy leverage. Decomposing it this way separates genuine operating quality from returns that are simply borrowed.
Worked example
A company earns $400,000,000 on $5,000,000,000 of revenue, holds $8,000,000,000 of assets and $3,200,000,000 of equity. Net margin is 8%, asset turnover 0.625×, and the equity multiplier 2.5×. Multiplying: 0.08 × 0.625 × 2.5 = 12.5% ROE — the same as $400M ÷ $3,200M.
Sources: DuPont analysis — Wikipedia
Frequently asked questions
Why break ROE into three parts?
A single ROE number hides its source. The DuPont breakdown reveals whether high returns come from strong margins, efficient asset use or heavy leverage — crucial because leverage-driven ROE carries more risk than margin-driven ROE.
What is the equity multiplier?
It is total assets divided by equity, a measure of financial leverage. A multiplier of 2.5× means assets are 2.5 times equity, with the rest funded by liabilities. Higher leverage lifts ROE but also amplifies losses.
Does higher ROE always mean a better company?
Not on its own. If the ROE is driven mainly by a large equity multiplier, the firm is simply using more debt. The DuPont view helps you tell durable, operations-driven returns from borrowed ones.
Related calculators
Educational estimate, not investment advice.