ROE decomposition.

DuPont analysis decomposes ROE into three drivers: profit margin × asset turnover × equity multiplier. This reveals whether high ROE comes from operational efficiency (high margin), asset utilisation (high turnover), or financial leverage (high multiplier). Each source has different implications for sustainability and risk.

1M net income on 10M revenue (10% margin) × 10M revenue on 8M assets (1.25x turnover) × 8M assets on 3M equity (2.67x leverage) = 10% × 1.25 × 2.67 = 33.3% ROE. High ROE but leverage-driven - two-thirds comes from debt amplification rather than operational quality.

Best companies show balanced DuPont: strong margin (operational excellence), good turnover (asset efficiency), and moderate leverage (prudent financing). A 20% ROE from 15% margin × 1.33x turnover × 1.0x leverage is fundamentally stronger than 20% ROE from 5% margin × 1x turnover × 4x leverage, even though the headline number matches.

A worked example

Try the defaults: net income of 1,000,000, revenue of 10,000,000, total assets of 8,000,000, shareholders equity of 3,000,000. The tool returns 33.33%. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Net Income, Revenue, Total Assets, and Shareholders Equity. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

The formula behind this

Margin = NI/Revenue. Turnover = Revenue/Assets. Multiplier = Assets/Equity. ROE = Margin × Turnover × Multiplier. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

What the score tells you

Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.