Windows & Mac Excel
Charley's Swipe File #71
The DuPont Formula is one of the best-known methods for
calculating a company's Return On Equity (ROE), one of the most
critical measures of financial performance. This dashboard uses
data over the past twelve months to show how your ROE is
calculated.
by
Charley Kyd, MBA Microsoft Excel MVP, 2005-2014
The Father of Spreadsheet Dashboard Reports
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If
you have a financial, background, you’ve
probably heard about the DuPont formula, which
calculates Return On Equity (ROE).
The formula can be expressed in several ways:
ROE = (Profit Margin)*(Assets Turnover)* (Leverage
Multiplier)
ROE = (Net Profit/Sales)*(Sales/Assets)* (1 + Debt/Equity)
ROE = (Net Profit/Equity)
This formula, in its various forms, shows how to calculate
the key measure of financial performance, ROE.
The ROE compares directly with your growth rate in sales. If
you grow faster than your ROE, you weaken your financial
structure; if you grow more slowly than your ROE, you strengthen
your financial structure. (However, companies that pay dividends
must reduce their ROE by their dividend payout ratio for this to
be true.)
Unfortunately, the formula can be rather confusing for
non-financial managers to understand. Therefore, I created this
DuPont Dashboard to map out how a company’s current ROE is
calculated. You can create the report monthly to document your
ROE generated over the prior 12 months of performance.
Excel Issues
This is an unusual chart, because I created it entirely in a
worksheet. The white boxes are cells and the black lines
typically are borders. The formulas in the report rely
extensively on the
OFFSET
function, which has this format:
(Continued in the documentation.)
Order Details
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Excel Versions:
Excel 2007 and after, for either Windows or Mac
Availability:
Instant download of zipped Excel and
PDF files. If you ever need
another download, you can get it at any time.
Guarantee:
One full year, unconditional.
Currency:
All prices are in US Dollar currency.
Licensing:
Two copies: One for work plus one
for home.
Credit Cards:
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Only $17.95


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