DuPont System of Business Financial Analysis The DuPont system of analysis is used to dissect the firm’s financial statements and to assess its financial condition from three perspectives: Operations, Investment, and Financing. Developed by Dupont (major US chemical company) financial staff in the 1920s to enable management to gain a deeper understanding of how to raise the Return on Owners’ Equity (ROE) by better management of three key components of its business: Operational Efficiency: (Net Profit Margin) Asset Use Efficiency: (Total Asset Turnover), where TAT = Sales/Total Assets, and Financial Leverage (Debt) Management: (Financial) Leverage Multiplier = Assets/Total Equity = (1 + D/E), SOURCE: Ross, et al., Ch. 3 Copyright ©2015 Pearson Education, Inc. All rights reserved. 3-‹#› DuPont System of Business Financial Analysis USE of Dupont System: If ROE is unsatisfactory for some unspecified reason, then the Dupont Identity (see below) tells the analyst where to start searching for the reason(s) for the unsatisfactory ROE Dupont Identity: ROE = Profit Margin x Total Asset Turnover x Equity Multiplier Copyright ©2015 Pearson Education, Inc. All rights reserved. 3-‹#› Derivation of DuPont IDENTITY Both ROE (defined as Net Income/Equity) and ROA (Net Income/Total Assets) are measures of profitability. They differ because of debt financing (aka Financial Leverage) Thus, (1) ROE = ROA x Equity Multiplier. After some algebra, we obtain a more detailed version of (1): (2) ROE = Net Income/Sales x Sales/Assets x Assets/Total Equity. Substituting into (2) the definitions of key ratios, we obtain the Identity: (3) ROE = Profit Margin x Total Asset Turnover x Equity Multiplier NOTES: ROA = (Net Income/Sales) x (Sales/assets) Equity Multiplier = Assets/Total Equity = (D +E)/E) = (1 + D/E) Copyright ©2015 Pearson Education, Inc. All rights reserved. 3-‹#› Simplifying the Modified DuPont Formula We can simply the preceding formula by: 1) replacing the first two terms by the ROA ratio, since ROA = Net profit margin  Total asset turnover. 2) Thus, ROE = ROA x FLM. NOTE: The ROAssets belongs ENTIRELY to common stockholders. Hence, FLM is the equity “multiplier,” adjusting UPWARDS the ROEquity. 3) Recall, that we can reexpress ROA as follows: Copyright ©2015 Pearson Education, Inc. All rights reserved. 3-‹#› KEY FORMULA: Modified Dupont Formula ROE = (Net Profit/Sales) x (Sales/total Assets) x (Assets/(Assets – Liabilities)), or ROE = Net Profit Margin x Total Asset Turnover x FLM Interpretation: Operations: ROE can be improved by improving the profitability of operations (Net Profit Margin), e.g., improve production and sales efficiency by cutting costs and charging a premium price. Investment: ROE can be improved by more effective use of assets that generate sales (Total Asset Turnover). NOTE: The TAT ratio is a “multiplier”, telling us how many times the profit margin is EARNED EACH YEAR! Financing.

1. DuPont System of Business Financial Analysis
The DuPont system of analysis is used to dissect the firm’s
financial statements and to assess its financial condition from
three perspectives: Operations, Investment, and Financing.
Developed by Dupont (major US chemical company) financial
staff in the 1920s to enable management to gain a deeper
understanding of how to raise the Return on Owners’ Equity
(ROE) by better management of three key components of its
business:
Operational Efficiency: (Net Profit Margin)
Asset Use Efficiency: (Total Asset Turnover), where TAT =
Sales/Total Assets, and
Financial Leverage (Debt) Management: (Financial) Leverage
Multiplier = Assets/Total Equity = (1 + D/E),
SOURCE: Ross, et al., Ch. 3
Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›
DuPont System of Business Financial Analysis
USE of Dupont System:
If ROE is unsatisfactory for some unspecified reason, then the
Dupont Identity (see below) tells the analyst where to start
searching for the reason(s) for the unsatisfactory ROE
Dupont Identity:
ROE = Profit Margin x Total Asset Turnover x Equity
Multiplier
Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›

2. Derivation of DuPont IDENTITY
Both ROE (defined as Net Income/Equity) and ROA (Net
Income/Total Assets) are measures of profitability.
They differ because of debt financing (aka Financial Leverage)
Thus, (1) ROE = ROA x Equity Multiplier.
After some algebra, we obtain a more detailed version of (1):
(2) ROE = Net Income/Sales x Sales/Assets x Assets/Total
Equity.
Substituting into (2) the definitions of key ratios, we obtain the
Identity:
(3) ROE = Profit Margin x Total Asset Turnover x Equity
Multiplier
NOTES: ROA = (Net Income/Sales) x (Sales/assets)
Equity Multiplier = Assets/Total Equity = (D +E)/E) = (1 +
D/E)
Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›
Simplifying the Modified DuPont Formula
We can simply the preceding formula by:
1) replacing the first two terms by the ROA ratio, since ROA =
2) Thus, ROE = ROA x FLM.
NOTE: The ROAssets belongs ENTIRELY to common
stockholders. Hence, FLM is the equity “multiplier,” adjusting
UPWARDS the ROEquity.
3) Recall, that we can reexpress ROA as follows:

3. Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›
KEY FORMULA: Modified Dupont Formula
ROE = (Net Profit/Sales) x (Sales/total Assets) x
(Assets/(Assets – Liabilities)), or
ROE = Net Profit Margin x Total Asset Turnover x FLM
Interpretation:
Operations: ROE can be improved by improving the
profitability of operations (Net Profit Margin), e.g., improve
production and sales efficiency by cutting costs and charging a
premium price.
Investment: ROE can be improved by more effective use of
assets that generate sales (Total Asset Turnover).
NOTE: The TAT ratio is a “multiplier”, telling us how many
times the profit margin is EARNED EACH YEAR!
Financing: ROE can be improved by optimal use of Debt
(Liabilities) in the capital structure. The key driver for
management is the Financial Leverage Multiplier (FLM). FLM
is the ratio of Total Assets to Common Stock Equity, where
Equity = Assets – Liabilities.
Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›
Applying the Dupont Formula
The research goal underlying the development of the Dupont
Formula was to obtain a simple model of a business presented in
an accounting ratio format.
The model is illustrated in the following diagram.

4. How do we use this diagram to “diagnose” the financial
“health” of a company and the fundamental cause(s) of its
under/over performance of the company, relative to industry
(competitors’) performance?
NOTE: Method of diagnosis is very similar to “differential
diagnosis” taught to medical students!
Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›
Figure 3.2
DuPont System of Analysis
Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›
Numerical Example: Modified Dupont Formula
Data for Bartlett Company:
Net Profit Margin = 7.2%
Total Asset Turnover = 0.85
Financial Leverage Multiplier = 2.051
Substituting these values into the following Modified Dupont
Formula, we obtain:
ROE = ROA x FLM
= Net Profit Margin x TAT x FLM
= 7.2% x (0.85) x 2.051
= 6.1% x 2.051
= 12.6%
Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›

5. EXAMPLE OF DIAGNOSIS Strategy:
I. Industry Comparison Analysis (“Top Down” strategy).
Suppose Bartlett’s ROE of 12.6% is BELOW the industry
average? Why is this so? Diagnosis Strategy:
1. Compare ROA and FLM to industry average.
2. Conclusion: FLM is identical to Industry Average. Hence, the
“cause” must lie in the ROA being below industry average.
3. Hence, move to left in the chart and analyze the two inputs
into ROA ratio: Net Profit Margin and Total Asset Turnover
(TAT).
4. Conclusion: Net Profit Margin matches industry average.
Hence, the “problem” MAY lie in the TAT.
5. Continue moving to the left in the TAT branch of the tree
structure
Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›
EXAMPLE OF DIAGNOSIS Strategy:
I. What if Scenario Analysis: “Bottom Up” strategy
ISSUE: What is the impact on ROE if management decides to
increase the level of Long-Term Debt?
Diagnosis Strategy: Start from left-hand side of Tree and
“walk” through the branch connecting Long Term Debt to the
Financial Leverage Multiplier.
Conclusion: By increasing debt (and prudently investing it, i.e.
rate of return on debt-financed project > interest cost of debt),
management increases total liabilities which, in turn reduces
equity. Thereby, increasing FLM and ROE.

6. Copyright ©2015 Pearson Education, Inc. All rights reserved.
3-‹#›
Factset Data Download
1.
At the tope left corner of the screen after logging in there is a se
arch sign.
2.
Once clicked a new side window opens and type in the name of
the industry you want to search
and click on the industry tab.
3.
Once you click the industries tab, it will give the list of all indu
stry indices and industry analysis.
There are a list of the all industries according to the geographic
region. In our research you will
mostly look into the USA industry analysis. In this screen shot I
have taken the USA real estate
industry.

7. 4.
Once the industry is selected you can double‐click on the indust
ry analysis or can simply type in
the Facset identifier which starts with FI in tis example the iden
tifier is “FI4885US”.
5.
The snapshot of the industry is the first page which comes to di
splay once the industry is
selected.
6.
Under the Key Industry Players you will find the list of all the t
op companies in the industry
under study.
7.
On the left side of the webpage there is the list of all the reports
. You can get the financial ratio
analysis under the “Financials” tab.
8.

8. On the left‐hand side of the screen is a column labeled Reports
where you can view different
data categories for that industry. Click on Financials. In Financi
als, click Ratio Analysis. The
resulting screen should look like this picture below.
9.
There is a downward facing green arrow in the top right corner
of every data category. Click on
this to download data. Download the first data set into excel.
10.
Consolidate the information for one industry into one excel shee
t. To do this, you can right click
the name of the excel tab, select Move or Copy… (resulting win
dow below), and then select
which workbook to move the tab into.
11.
In the Industry page, in the Reports column, there is an Overvie
w Report, and in that report is
the Snapshot report (pictured below). Click the Snapshot Report
.
12.
In the resulting window (pictured below), the Key Industry Play

9. ers are listed. Download this
data. In the excel workbook, rank the companies by Market Capi
talization (stated as MV$ in
FactSet).
13.
Select one of the top five largest constituents in that industry. C
lick on the Company/Security
Tab in the top ribbon where you found the Industry tab.
14.
Start typing the company’s name in the entry field below FACT
SET, and it should be an option
(pictured below).
15.
In the Reports column on the left‐hand side of the screen under
the company name, select
Financials. Then select Ratio Analysis. Scroll downwards on the

10. resulting screen to find the
DuPont Analysis.
HomebuildersHomebuildersDEC '17DEC '16DEC '15DEC
'14DEC '13Industry Analysis Gross
Margin20.2520.3020.8621.6319.77Operating
Margin9.839.719.679.838.14Net
Margin6.586.748.248.0114.50EBIT
Margin9.839.719.679.838.14EBITDA
Margin10.2810.2110.2310.358.65Return on
Assets5.735.525.925.269.18Return on
Equity12.3712.1813.9512.5322.95Return on Invested
Capital7.006.867.456.3911.56Free Cash Flow
Margin5.172.07(3.67)(7.29)(9.33)DEC '17DEC '16DEC '15DEC
'14DEC '13Sales/Revenue
Growth13.0024.3623.0822.4538.88COGS
Growth13.0024.9317.5019.0434.62Gross Income
Growth13.0122.0150.4636.3059.56SG&A
Growth12.2517.4813.6424.7119.39EBIT
Growth14.6025.56137.9454.65209.59EBITDA
Growth13.9925.49127.4252.91176.66Pretax Income
Growth12.279.24225.4169.02278.96Net Income
Growth13.0024.3623.0822.4538.88Dividend
Growth15.9425.4647.16101.85(31.06)DEC '17DEC '16DEC
'15DEC '14DEC '13Net Debt/EBITDA3.413.914.534.815.08Net
Debt/(EBITDA-Capex)3.584.114.755.125.37Total
Debt/EBITDA4.194.725.676.247.71Total
Debt/EBIT4.374.965.996.578.19EBIT/Interest Expense (Int.
Coverage)5.144.503.593.862.75EBITDA/Interest
Expense5.374.733.794.062.92CFO/Interest
Expense(58.22)26.27(12.32)(37.92)(65.52)LT
Debt/EBITDA3.924.195.035.977.15Net
Debt/FFO376.82439.87518.47520.28552.52LT

11. Debt/FFO433.59470.72575.49646.19778.44FCF/Total
Debt11.954.18(5.86)(11.42)(13.70)CFO/Total
Debt13.105.20(5.04)(10.45)(12.99)DEC '17DEC '16DEC
'15DEC '14DEC '13LT Debt/Total
Equity76.9678.4088.1097.4299.25LT Debt/Total
Capital41.0941.4643.9747.8547.22LT Debt/Total
Assets35.5335.3337.2040.6539.55Total Debt/Total
Assets37.9539.8341.9342.5042.64Total Debt/Total
Equity82.2088.3899.30101.86106.99Net Debt/Total
Capital36.7138.8939.8338.8634.03Total Debt/Total
Capital45.1246.9249.8350.4651.69DEC '17DEC '16DEC
'15DEC '14DEC
'13Price/Earnings17.0611.3012.1414.268.97Price/Earnings (excl
negatives)16.1311.0312.0114.018.68Price/Sales1.120.761.001.1
41.30Price/Book Value2.111.381.691.792.06Price/Cash
Flow19.8129.77(31.34)(17.13)(14.70)Price/Cash Flow (excl
negatives)15.7813.38------Price/Free Cash
Flow21.7236.81(27.27)(15.67)(13.95)Enterprise
Value/EBIT15.0011.9915.1916.8021.48Enterprise
Value/EBITDA14.3611.4114.3815.9620.23Enterprise
Value/Sales1.491.171.471.651.76
Eng & ConstNorth America / Engineering & Construction DEC
'17DEC '16DEC '15DEC '14DEC '13Industry Analysis Gross
Margin11.2311.1611.3112.8411.58Operating
Margin4.013.884.265.205.27Net
Margin2.911.562.262.962.77EBIT
Margin4.013.884.265.205.27EBITDA
Margin6.006.046.457.197.13Return on
Assets3.621.912.853.373.60Return on
Equity9.545.437.919.289.21Return on Invested
Capital6.343.374.926.276.09Free Cash Flow
Margin2.022.882.300.482.07Sales/Revenue
Growth2.07(2.18)7.33(2.51)4.20COGS
Growth2.89(2.31)8.29(3.28)4.22Gross Income
Growth(5.38)(0.99)(0.94)4.733.23SG&A
Growth5.45(0.82)4.989.298.35EBIT

12. Growth(19.65)(1.45)(8.54)(0.78)0.00EBITDA
Growth(15.53)(3.41)3.782.022.45Pretax Income
Growth(20.88)10.25(44.22)(2.62)24.35Net Income
Growth(19.11)78.99(53.49)4.87(2.32)Dividend
Growth28.720.750.5219.3714.76Price/Earnings22.9739.7622.32
21.8824.60Price/Earnings (excl
negatives)19.2324.2913.4318.9022.27Price/Sales0.670.620.500.
650.68Price/Book Value2.192.161.762.032.26Price/Cash
Flow18.7214.0012.3317.3714.93Price/Cash Flow (excl
negatives)13.5312.509.7815.5912.83Price/Free Cash
Flow33.0421.5021.92135.7532.87Enterprise
Value/EBIT19.5519.6814.8014.6814.53Enterprise
Value/EBITDA13.0712.649.7810.6310.76Enterprise
Value/Sales0.780.760.630.770.77Net
Debt/EBITDA1.812.221.811.511.10Net Debt/(EBITDA-
Capex)2.723.272.794.072.20Total
Debt/EBITDA3.073.452.952.772.40Total
Debt/EBIT4.595.374.463.823.24EBIT/Interest Expense (Int.
Coverage)4.763.243.895.165.61EBITDA/Interest
Expense7.145.045.907.147.57CFO/Interest
Expense4.203.803.723.884.97LT
Debt/EBITDA2.562.912.682.122.15Net
Debt/FFO255.96318.41286.68236.77149.22LT
Debt/FFO362.57417.54426.23334.01290.70FCF/Total
Debt11.0013.8412.022.2312.21CFO/Total
Debt19.4121.2721.3518.5926.80LT Debt/Total
Equity50.4561.3460.9448.5251.78LT Debt/Total
Capital31.4735.5436.4929.7232.82LT Debt/Total
Assets19.1321.5522.0017.5420.13Total Debt/Total
Assets22.8825.5124.1922.8722.47Total Debt/Total
Equity60.3272.5866.9963.2757.78Net Debt/Total
Capital22.2227.1024.5421.0616.84Total Debt/Total
Capital37.6342.0540.1138.7536.62
Company analysisD.R. Horton, Inc.DHI 23331A109 2250687
NYSE Common stock Source: FactSet FundamentalsSEP
'17SEP '16SEP '15SEP '14SEP '13SEP '12SEP '11SEP '10SEP

13. '09SEP '08Company Analysis 365 Days366 Days365 Days365
Days365 Days366 Days365 Days365 Days365 Days366 Days
Asset Turnover (x)1.191.071.010.840.770.690.640.690.510.69
x Pretax Margin
(%)11.3711.1310.3810.1510.515.580.332.26(15.10)(39.60) =
Pretax Return on Assets
(%)13.4911.9110.508.518.133.830.211.56(7.63)(27.29) x Tax
Rate Complement (1-Tax
Rate)64.8165.4866.8265.5270.34393.70593.39246.33---- =
Return on Assets
(%)8.747.807.025.585.7215.071.263.84(7.53)(27.31) x Equity
Multiplier
(Assets/Equity)1.631.791.942.082.122.042.182.622.842.29 =
Return on Equity
(%)14.2813.9713.6411.6312.1030.792.7410.06(21.41)(62.55)
x Earnings Retention (1-
Payout)85.4086.4487.6890.8397.1894.5834.7880.52---- =
Reinvestment Rate
(%)12.2312.1011.9710.5710.5229.250.928.10(23.27)(65.92)Not
e: EBIT Return on Assets
(%)14.0212.1810.718.477.903.901.002.72(6.66)(26.21)Note:
Interest as %
Assets0.000.000.000.000.060.370.961.471.440.55Jacobs
Engineering Group Inc.JEC 469814107 2469052 NYSE
Common stock Source: FactSet FundamentalsSEP '17SEP
'16SEP '15SEP '14SEP '13SEP '12SEP '11SEP '10SEP '09SEP
'08364 Days364 Days371 Days364 Days364 Days364 Days364
Days364 Days367 Days366 Days Asset Turnover
(x)1.361.451.491.611.671.691.932.182.632.93 x Pretax
Margin (%)3.922.623.554.275.605.454.983.955.455.84 = Pretax
Return on Assets
(%)5.343.795.306.899.379.219.638.6014.3517.15 x Tax Rate
Complement (1-Tax
Rate)73.0874.8276.4664.9566.5465.8964.8862.8464.0064.00 =
Return on Assets
(%)3.942.783.734.176.005.886.175.409.1810.97 x Equity

14. Multiplier
(Assets/Equity)1.701.771.851.811.781.831.741.661.791.88 =
Return on Equity
(%)6.694.926.927.5610.6610.7710.738.9716.4220.58 x
Earnings Retention (1-
Payout)75.21100.00100.00100.00100.00100.00100.00100.00100
.00100.00 = Reinvestment Rate
(%)5.444.926.927.5610.6610.7710.738.9716.4220.58Note: EBIT
Return on Assets
(%)6.666.957.428.029.489.349.958.7814.2516.77Note: Interest
as % Assets0.160.210.250.140.180.170.150.210.070.10
FINA 4596 001Student Name IndustryFactset
RefIndustryFactset RefInternet software/servicesFI3320US
building productsFI1230US hotels/resorts/cruise linesFI3440US
metal fabricationFI1205US restaurantsFI3435US aerospace and
defense.FI1330US apparel/footwearFI2440USInternet
software/servicesFI3320US truckingFI4615US
hotels/resorts/cruise linesFI3440US electric utilitiesFI4705US
restaurantsFI3435US Oilfield Services/EquipmentFI3110US
apparel/footwearFI2440US household/personal careFI2435US
truckingFI4615US diversified foodsFI2405US electric
utilitiesFI4705US oil + gas productionFI2105US Oilfield
Services/EquipmentFI3110US packagingFI2235US
household/personal careFI2435US Chemicals:
agricultureFI2215US diversified foodsFI2405US
biotechnologyFI2320US oil + gas productionFI2105US major
pharmaceuticalsFI2305US packagingFI2235US
hospitals/nursing/managementFI3360US Chemicals:
agricultureFI2215US construction materialsFI1135US
biotechnologyFI2320US Automotive AftermarketFI1410US
major pharmaceuticalsFI2305US building productsFI1230US
hospitals/nursing/managementFI3360US metal
fabricationFI1205US construction materialsFI1135US aerospace
and defense.FI1330US Automotive AftermarketFI1410US
FINA 4596 004Student Name IndustryFactset
RefIndustryFactset RefInternet software/servicesFI3320US

15. biotechnologyFI2320US hotels/resorts/cruise linesFI3440US
major pharmaceuticalsFI2305US restaurantsFI3435US
hospitals/nursing/managementFI3360US
apparel/footwearFI2440US construction materialsFI1135US
truckingFI4615US Automotive AftermarketFI1410US electric
utilitiesFI4705US building productsFI1230US Oilfield
Services/EquipmentFI3110US metal fabricationFI1205US
household/personal careFI2435US aerospace and
defense.FI1330US diversified foodsFI2405USInternet
software/servicesFI3320US oil + gas productionFI2105US
hotels/resorts/cruise linesFI3440US packagingFI2235US
restaurantsFI3435US Chemicals: agricultureFI2215US
apparel/footwearFI2440US biotechnologyFI2320US
truckingFI4615US major pharmaceuticalsFI2305US electric
utilitiesFI4705US hospitals/nursing/managementFI3360US
Oilfield Services/EquipmentFI3110US construction
materialsFI1135US household/personal careFI2435US
Automotive AftermarketFI1410US diversified foodsFI2405US
building productsFI1230US oil + gas productionFI2105US
metal fabricationFI1205US packagingFI2235US aerospace and
defense.FI1330US Chemicals: agricultureFI2215US
FINA 4596 005Student Name IndustryFactset
RefIndustryFactset RefInternet software/servicesFI3320US
restaurantsFI3435US hotels/resorts/cruise linesFI3440US
apparel/footwearFI2440US restaurantsFI3435US
truckingFI4615US apparel/footwearFI2440US electric
utilitiesFI4705US truckingFI4615US Oilfield
Services/EquipmentFI3110US electric utilitiesFI4705US
household/personal careFI2435US Oilfield
Services/EquipmentFI3110US diversified foodsFI2405US
household/personal careFI2435US oil + gas
productionFI2105US diversified foodsFI2405US
packagingFI2235US oil + gas productionFI2105US Chemicals:
agricultureFI2215US packagingFI2235US
biotechnologyFI2320US Chemicals: agricultureFI2215US major
pharmaceuticalsFI2305US biotechnologyFI2320US

16. hospitals/nursing/managementFI3360US major
pharmaceuticalsFI2305US construction materialsFI1135US
hospitals/nursing/managementFI3360US Automotive
AftermarketFI1410US construction materialsFI1135US building
productsFI1230US Automotive AftermarketFI1410US metal
fabricationFI1205US building productsFI1230US aerospace and
defense.FI1330US metal fabricationFI1205USInternet
software/servicesFI3320US aerospace and defense.FI1330US
hotels/resorts/cruise linesFI3440US
Factset Research Assignment
1. Part 1: Industry analysis:
Part a. Using the two industries you are assigned:
i. Log into Factset (Click the following link to receive your
Academic login
https://advantage.factset.com/academic_idrequest if you have
not got
one).
ii. Download each of the following sections for each industry:
1. Profitability (Ratio Analysis)
2. Growth (Key Items)
3. Valuation (Ratio Analysis)
4. Debt coverage (Ratio Analysis)
5. Leverage (Ratio Analysis)
iii) In a new workbook (name it as Factset Assignment), pull all
of the section
data for each industry into a separate tab. Rename each tab by
the industry,
e.g. Homebuilders, etc.
Part b. Compare industry performance for the last 5 years. Your
download will have 10 years of data; delete the first 5 years of

17. data.
i. Identify significant industry differences for the public firms:
1. Range of size (minimum, maximum, median)
2. Trends in revenue, EBITDA, and net income growth
ii. Using a DuPont analysis framework explain:
1. Why ROE increased or decreased during the past 5 years for
each
industry
2. Why ROE differs in the most recent year between industries
iii. Valuation multiples:
1. Trend in the P/E and EV/EBITDA for each industry during
the past 5
years
2. Explain the differences in the trends, if any.
Part c. Write your industry comparison answers for section (b)
in a Word document and then copy and “paste special” as a
WORD file into first industry tab of your “Factset Assignment”
workbook.
2. Part 2: Company Analysis
a. Pick one company from each industry. Download the Dupont
Analysis for both
companies into one tab labeled Company Analysis using fiscal
years.
b. Using the most recent fiscal year (again, you will have 10
years of data), identify the most important drivers of differences
in ROA and ROE. To successfully address this question, you
must identify other measures of financial performance that drive
the DuPont analysis, e.g. gross profit margin, working capital
turnover.
c. Like 1(c) above, write your company comparison in a Word

18. document and copy and paste into the Company Analysis tab.
Deliverables:
1. Excel workbook titled “Factset Assignment,” containing three
tabs.
a. The first tab contains the first industry data and your
response to the analysis
outlined in 1. b.
b. The second tabs include the data for the second industry.
c. The third and last tab, named “Company Analysis,” contains
Part 2 in an organized manner.