How it works
DuPont ROE = net profit margin × asset turnover × equity multiplier. Use consistent periods and average balance-sheet values.
Input definitions
- Net income
- Enter the value in the labeled unit.
- Revenue
- Enter the value in the labeled unit.
- Average assets
- Enter the value in the labeled unit.
- Average equity
- Enter the value in the labeled unit.
A worked example
- Net income
- 10000
- Revenue
- 100000
- Average assets
- 50000
- Average equity
- 25000
Assumptions & limits
Uses the accounting classifications, periods and policies you enter. Illustrative management-accounting model; it is not an audited statement, filing or determination of local accounting or tax compliance.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-18. Content checked against the stated method and examples. Our verification approach.
Common questions
Can a high ROE be driven by leverage?
Yes. The equity multiplier highlights how financing structure can increase ROE. It does not by itself prove strong operating performance.
How does DuPont three-factor ROE work?
DuPont ROE = net profit margin × asset turnover × equity multiplier. Use consistent periods and average balance-sheet values.
What should I check before using DuPont three-factor ROE?
Uses the accounting classifications, periods and policies you enter. Illustrative management-accounting model; it is not an audited statement, filing or determination of local accounting or tax compliance.