DuPont analysis was developed around 1910 by Donaldson Brown, a manager at the American chemical company DuPont, and began being used internally in 1912 to evaluate the profitability of its subsidiaries. This formula originated from practical financial management—not academic theory—and has therefore remained a cornerstone of financial analysis for over a century. At its core, the formula calculates Return on Equity (ROE): how much net profit is generated per one unit of shareholders’ equity invested. ROE is then decomposed step-by-step to reveal precisely *how* a company generates profits. For example, if ROE = 15%, it means that for every ¥100 invested by shareholders, the company earns ¥15 in net profit annually. The classic DuPont formula is: ROE = Net Profit Margin × Total Asset Turnover × Equity Multiplier = (Net Income ÷ Revenue) × (Revenue ÷ Total Assets) × (Total Assets ÷ Shareholders’ Equity) Breaking down the three components: 1. Net Profit Margin = Net Income ÷ Revenue → reflects product-level profitability: How good is the product? How strong is its earning power? • High net margin: luxury goods, pharmaceuticals—high profit per unit sold. • Low net margin: supermarkets, general merchandise—thin profit per item. 2. Total Asset Turnover = Revenue ÷ Total Assets → measures sales efficiency (asset utilization speed). • Example: A store invests ¥200,000 in assets (renovation + inventory) and generates ¥1,000,000 in annual revenue → asset turnover = 5 times/year (i.e., assets are fully cycled five times annually). • This reflects operational efficiency—how quickly inventory and assets convert into sales. Supermarkets, though low-margin, compensate with extremely high turnover and volume. 3. Equity Multiplier = Total Assets ÷ Shareholders’ Equity → measures financial leverage: how much debt is used to fund operations? • Example: Shareholders contribute ¥100,000; the company borrows another ¥100,000 → total assets = ¥200,000.

Corporate Financial Ratios: Profitability Analysis (Net Profit Margin, Gross Profit Margin, Return on Assets, Return on Equity)

Corporate financial ratio analysis covers all aspects of business management. Ratios can broadly be categorized as: liquidity analysis, operational efficiency analysis, long-term solvency analysis, profitability analysis, investment return analysis, and cash flow analysis. This section introduces profitability analysis—the ability of a company to generate profit. Generally speaking, profitability should be assessed under normal operating conditions. Key profitability ratios include: Net Profit Margin, Gross Profit Margin, Return on Assets (ROA), and Return on Equity (ROE). To aid understanding, here’s an intuitive, everyday example: 1. Gross Profit Margin: Imagine you run a small fruit stall. Gross profit margin represents your ‘core markup’. For instance, you buy a box of apples for ¥100 and sell them for ¥150—your gross profit is ¥50. Your gross profit margin is thus 50% (¥50 ÷ ¥150), i.e., the proportion of gross profit relative to sales revenue. 2. Net Profit Margin: Continuing the fruit stall example: beyond the cost of apples, you also incur rent, wages, utilities, and other expenses. After deducting *all* such costs, the amount remaining is your ‘net profit’. Net profit margin is this final amount expressed as a percentage of total revenue. If your total revenue is ¥1,000 and your net profit is ¥100, your net profit margin is 10%. 3. Return on Assets (ROA): This metric reflects ‘how efficiently assets generate profit’. Suppose your stall owns equipment and inventory worth ¥500 total (i.e., total assets), and earns ¥50 in net profit over one year. Then ROA = 10% (¥50 ÷ ¥500). It measures how much profit a company generates per unit of assets employed. 4. Return on Equity (ROE): This is essentially the ‘return on shareholders’ investment’. If you personally invested ¥200 to start the stall and earned ¥40 in net profit over the year, your ROE is 20% (¥40 ÷ ¥200). It indicates how effectively shareholder capital generates returns.

Braskem S.A. Preferred A Shares Return on Equity Percentage

22 hours ago

TradingView displays financial data for Braskem S.A. Preferred A shares, focusing on Return on Equity percentages. The market is currently closed with no active trades recorded.

TradingView

2026-05-19

BRASKEM SA Officer Carlos Plachta Files Initial Form 3

2026-05-28

Braskem Files 2026 Reference Form for 2025 Results in Brazil

2026-06-09

Braskem SA Files Form 6-K Current Report with SEC

2026-06-16

[Form 3] Braskem SA Initial Statement of Beneficial Ownership

2026-06-17

BRASKEM SA Director Octavio Cortes Pereira Lopes Files Form 3