DuPont Identity (ROE Decomposition) Calculator

The DuPont identity breaks return on equity (ROE) into three multiplied factors, each isolating a different driver of profitability: net profit margin = net income ÷ revenue (how much profit each dollar of sales keeps), asset turnover = revenue ÷ total assets (how efficiently assets generate sales), and the equity multiplier = total assets ÷ shareholders' equity (how much leverage — debt relative to equity — is amplifying returns). Multiplied together, ROE = net profit margin × asset turnover × equity multiplier.

That product always equals net income ÷ shareholders' equity exactly, since revenue and total assets cancel out algebraically — this calculator computes the three factors independently and multiplies them rather than taking that shortcut, so you can see exactly which factor is driving a given ROE, not just the final number. Return on assets (net profit margin × asset turnover, before the leverage step) is shown as an intermediate figure for the same reason.

Two companies can report an identical ROE for very different reasons — a thin-margin, high-turnover retailer and a high-margin, highly-leveraged bank can land on the same number — which is the entire point of decomposing it rather than quoting ROE alone.