Deconstructing Profitability – DuPont Analysis Around The World [INTERACTIVE]

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Deconstructing Profitability – DuPont Analysis Around The World [INTERACTIVE]

Deconstructing Profitability – DuPont Analysis Around The World by Eric Bush, CFA – Gavekal Capital Blog

DuPont Analysis is a useful tool taught in undergraduate finance classes and found in CFA textbooks everywhere. It breaks down return on equity (ROE) into three parts: net profit margin, asset turnover, and financial leverage. By breaking up ROE into three individual segments, analysts can understand whether a company is delivering stronger returns to its equity holders by being more operationally efficient (net profit margin), by making efficient use out of its assets (asset turnover) , or by using debt to increase returns to equity holders (financial leverage) or some combination of the three.

In the interactive table below, we break down ROE using the DuPont framework for all developed market countries. Once an individual country is selected you can see the breakdown of each data item by industry group as well as the overall median value for the country as a whole. We suggest that you play around and look at how vastly different returns and drivers of returns can be in different countries and for different industry groups.

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