DuPont Analysis
Perform a Dupont analysis to breakdown the return on equity (ROE) into its components.
The Dupont analysis is a method used to dissect and understand the factors that drive a company’s return on equity (ROE). It breaks down the ROE into three key components: Profit Margin, Asset Turnover, and Financial Leverage.
The formula is as follows:
\[\text{Profit Margin} = \text{Net Income} / \text{Revenue}\] \[\text{Asset Turnover} = \text{Revenue} / \text{Average Total Assets}\] \[\text{Financial Leverage} = \text{Average Total Assets} / \text{Average Total Equity}\] \[\text{ROE} = \text{Profit Margin} \cdot \text{Asset Turnover} \cdot \text{Financial Leverage}\]Also known as: DuPont, ROE decomposition, three-factor DuPont.
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Calculate the DuPont Analysis in Python
The DuPont Analysis is available in the Models module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_dupont_analysis as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
dupont_analysis = toolkit.models.get_dupont_analysis()
dupont_analysis.loc["AAPL"]
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| Net Profit Margin | 0.2588 | 0.2531 | 0.2531 | 0.2397 | 0.2692 |
| Asset Turnover | 1.0841 | 1.1206 | 1.0868 | 1.0899 | 1.1493 |
| Equity Multiplier | 5.255 | 6.1862 | 6.252 | 6.0251 | 5.5418 |
| Return on Equity | 1.4744 | 1.7546 | 1.7195 | 1.5741 | 1.7142 |
Parameters
get_dupont_analysis accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the values. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int | None, optional): The trailing period to use for the calculation. Defaults to None.
Related Models
The Models module page introduces the module, and the sidebar lists all of its functions.