The DuPont financial analysis can be used to illustrate how different factors impact on important financial performance indicators, such as, the return on capital employed (ROCE), the return on assets (ROA), or the return on equity (ROE). While these ratios can be calculated by using a simple formula, the model provides more insight into the underlying elements that make up the ratios. The model can be used in several ways. First, it can be used as the basis for benchmarking, i.e. comparing different companies in an industry to answer the question of why certain companies realise superior returns compared to their peers. Second, it can be used to predict the effect of possible management actions. Here is interactive model for ROA:

Reference: Marcel Van Assen,Gerben Van den Berg,Paul Pietersma : Key Management Models: The 60+ models every manager needs to know

Hint: Click on the box with arrow and set value by range slider.

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