Decompose ROE into net margin, asset turnover, and equity multiplier, and also report ROA.
| Net margin (%) | – |
| Asset turnover | – |
| Equity multiplier | – |
| ROE (%) | – |
| ROA (%) | – |
Use this DuPont calculator for the three-step identity: ROE = net profit margin × asset turnover × equity multiplier. Net income can be negative. ROIC is not here — that needs NOPAT and invested capital.
Net margin = NI ÷ sales. Asset turnover = sales ÷ assets. Equity multiplier = assets ÷ equity. ROE = the product of those three (as a percent). ROA = NI ÷ assets.
Net income: Bottom-line profit (can be negative).
Sales: Revenue for the same period.
Assets: Total assets.
Equity: Book equity.
Net margin (%): NI as a percent of sales.
Asset turnover: Sales per unit of assets.
Equity multiplier: Assets per unit of equity (leverage).
ROE (%): Return on equity.
ROA (%): Return on assets.
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