# DuPont Analysis Calculator

This DuPont analysis calculator allows a business to input details of assets and equity from the balance sheet, and revenue, operating income, income before tax, and net income from the income statement, and calculates five ratios and the return on equity. The calculator allows details of two businesses to be entered so that comparisons can be made.

Most owners start a business with a view to making a profit to give them a return on their investment. This return can be measured using the return on equity ratio, calculated by dividing the net income by the owners equity.

In itself, the ratio does not explain which aspects of the business are impacting on its ability to make a return. To do this the DuPont analysis is used to separate the return on equity into five separate ratios.

## The Five Ratios

1. Operating margin – How efficiently sales are being used to generate profits
2. Asset turnover – How well assets are being used to generate revenue
3. Equity Multiplier – How much the business is using financial leverage
4. Financial cost ratio – How much the financial leverage is costing the business
5. Tax effect ratio – How the business is impacted by the taxation system.

## Using the DuPont Analysis Calculator

The Excel DuPont Analysis calculator is available for download below and is used as follows:

1. Enter the assets Assets are obtained from the balance sheet of the business. The amount to enter is the total value of both current assets and long term (fixed) assets.
2. Enter the equity Equity is also found on the balance sheet of the business. The amount is the total of capital invested by the owner and retained earnings. Equity is sometimes referred to as shareholder equity.
3. Enter the revenue Revenue is found at the top of the income statement, and is sometimes referred to as sales or turnover..
4. Enter the operating income Operating income is found on the income statement and might be referred to as earnings or profit before interest and tax (EBIT or PBIT).
5. Enter the income before tax Income before tax is found on the income statement and is sometimes called earnings or profit before tax (EBT or PBT).
6. Enter the net income Net income is found at the bottom of the income statement and is often referred to as earnings or profit after tax (PAT). For each business entered, the DuPont analysis calculator works out the value of each of the five ratios and the return on equity.