Dupont 5 Steps Excel Model

Description
The five-step, or extended, DuPont equation breaks down net profit margin further. From the three-step equation we saw that, in general, rises in the net profit margin, asset turnover and leverage will increase ROE. The five-step equation shows that increases in leverage don't always indicate an increase in ROE

By analyze ROE with three steps and five steps Dupont model, you are able to see the nature of ABC growth year by year.

In stead of using normal formular of ROE, only based on Net income and Equity. Two factors which are easy to affected and not considered to see the whole picture of the business.

Using 3 steps and 5 steps Dupont model, we can see:

- Tax Burden is unchanged.
This means, ABC has no change in Tax policy.

- Interest Burden is unchanged and equal to 1.
ABC almost has no debt and the Capital Structure is financed mostly by Equity .

- Operating Profit Margin (EBIT Margin) improved better.
This shows that ABC receive more profit with one unit of net sales.
This is an important factor which indicate that ABC have an significant advantage in the market. However, in the recent two years, the situation has been worse and the reason can come from the competitors and market saturation

- Asset turnover improved . This implies that ABC more and more success on using their Assets.

- Financial Leverage increased.