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Return on Equity1




                                           Return on Capital1                                         Leverage 3



                            Net Profit                                     Total Asset
                             Margin1                                     Turnover Ratio 2



   Operating Profit                                                Fixed Asset                     Working Capital
                                            Tax Rate 1
      Margin1                                                       Turnover 2                       Turnover 2




Gross Profit                Operating                Net Profit, Plant           Other Assets   Inventory    Receivable   Payable
  Margin1                 Expense Ratio1           & Equipment Ratio 2               Ratio 2      Days 2       Days 2      Days 2




       1
         Profitability ratios
       2Activity ratios
       3
         Solvency ratios                                                                                                             

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Du Pont Method Pyramid

  • 1. Return on Equity1 Return on Capital1 Leverage 3 Net Profit Total Asset Margin1 Turnover Ratio 2 Operating Profit Fixed Asset Working Capital Tax Rate 1 Margin1 Turnover 2 Turnover 2 Gross Profit Operating Net Profit, Plant Other Assets Inventory Receivable Payable Margin1 Expense Ratio1 & Equipment Ratio 2 Ratio 2 Days 2 Days 2 Days 2 1 Profitability ratios 2Activity ratios 3 Solvency ratios