POLIR-Economics-Investment-Enhanced DuPont Identity + Fomula + Model + Analytical Method

POLIR-Economics-Investment-DuPont Identity + Fomula + Model + Analytical Method

Background Knowledges

• 市场是有竞争的并且总会有新势力诞生破旧立新、并经过一定的规律达成"Equilibrium(动态平衡)":
  无论是中央内部个派系之间，还是地方政府、行业、集团等，都有利益与矛盾并存。
  新事物/势力总会有，破旧立新，但是总会经历"发展的经济规律"后达到新Equilibrium(动态平衡).
  因为，假设新势力能无限的"营利"，资本就一定会超越其它各方的。经历垄断或成为政权的一部分。
  另外，Regulators和 Gov.会对各行业有"利润率、产业规划"及"资源配给"，对"每行业每公司"定好基调。
  所以，对大量公司，是使Equilibrium(动态平衡)破旧立新。
• Org.的净利润率并不是越高越好而是要设置在合理的区间。
  设置合理的利润率特重要 类似于 "国家设计合适的LPR(长期贷款利率)"。
  例如，
  减少"长期成本(研发、市场营销或变现长期资产投资)"可快速提高"净利润率"，
  但是必然会Org.的长期发展及利润稳定可持续。
  所以，不仅要看Profitable, 而且要看 Structure、Profitability及Sustainability。
• 劳动和Asset是有其Lifecycle及价值周期规律的:
  人的出生、教育、就业、婚恋、生育、阶层变迁 都有极强规律。
  政府、组织、经济、政治等都有特别深的规律化生产生活，
  自然界的四季变换、地理、第一/二/三等产业、经济活动等都有规律，
  这些是"Org.通过Organizing、Operating、破旧立新产生Value"的源头。
• 资本有时间价值和所有者收益:
  通过筹资、用资
• 大多数人的"劳动"和"资本":
• 利润的根本来源是"资本、劳动的增值":
• Income 要
  • 先明确 是 "组织类型:法人/非法人组织" 或 个人，即组织目的 和 是否以营利为主目标:
    不同类型的Org.收入结构有非常大的不同。
    例如 完全靠财政拨款的事业单位(营利不是主目的)，
    政府机构(营利不是主目的)可以有"其它收入"，
    公益组织(营利不是主目的)的捐赠，
    最常见的是 "营利公司法人(营利是主目的)"，
    收入类型完全不同。
  • Structure收入构成:
    最常见的是"营利公司法人"，以"营利为主目标"，
    大多数的营利活动有两大类:
    • 主营业务 Operating Activities:
      • 一定是收入/净利润的"主源而且可持续"，因为对于充分竞争的开放市场，
        大多数公司必须FOCUS(聚焦)，才能降低RISKS并打造CORE COMPETENCIES。
        另外，也是Regulation必要，因为要培养地方和国家的国际竞争力。
        所以，对"利润的结构分析"目标是明确:
        不仅要看Profitable, 而且要看RC(Risk Control)、Structure、Profitability及Sustainability。
      • Operation方面的Capital Perspective Analysis(资本视角分析): Fund(筹资) + Use of Fund(用资)
        主营业务的Operation方面的Capital有两部分: Capital资产(FIXED ASSETS) + Revenue(WORKING CAPITAL)
        必须有 Capital + Revenue(Working Capita)l的Source of Fund 及 Use of Fund。
        • Capital(FIXED ASSETS): 资本性投入对主营有"资本效益"；
        • Revenue(WORKING CAPITAL):
    • 资本业务 Financial Activities
      资本业务，对其标的，都有"Expectation(期望)" 和 "Implication(影响)"或"Capital Proposition(资本主张)"。
      • Investment(对外投资):
        购买 Real Estate(工商用地、办公大楼、厂房等)、购买其它公司的Share(股份)、理财。
        收购、并购等
      • Fund(对内注资)
        • Loan Capital: 借贷资本，多数是Clearing Banks(清算银行)提供的借贷。
        • Share Capital:股权资本，常见是非银行资本，包括Venture Capital(风投资本)。

以下金融/会计专业词汇有待查验:

• NET EARNINGS:
  refer to the total profit a company makes after deducting all expenses, including taxes and interest,
• NET INCOME
  specifically refers to the profit a company makes after deducting all expenses and taxes.

Sales,Income,Gain,Earning,Profit这几个概念具体有什么联系和区别？

• Sales:
  营业额，卖出产品与服务后，商家所得到的直接营业额收入。
  比如一家保时捷4S店，每个月卖出去100台80000\(，当月营业额就是8,000,000\)。
• Gross Profit:
  Sales扣掉Cost of Goods Sold。
  Cost of Goods Sold就是成本，又分为Direct和Indirect Cost；
  或者包括Material, Labor和Overhead，这是两种不同的成本计算方法，
  应用到不同的成本分析，有兴趣的可深挖。
• Income，
  公司净收入，Gross Profit减去各项开支，
  包括利息支出、管理费用、水电费、所交税费、法律费用、捐款、差旅费用、
  折旧等——就是维持公司运营的各项费用，
  就是公司的净收入。
• 总的来说就是这么个公式(也是所有利润表的结构)：
  Sales - Cost of Goods Sold = Gross Profit
  Gross Profit - Expenses = Net Income

Earnings有好几个概念。但是先明确"Operating Activities(营业行为)"有关，其次是Earning(税后净利)。

• Retained Earnings
  这是一个长期的概念，收益续投: Earnings - Divided。
• EBITDA
  "EBITDA(Earnings Before Interest, Tax, Depreciation and Amortization)
  这叫 "在扣掉利息、税务支出、折旧、摊销"前的盈利，特别指明"扣除ITDA前的"。
  这是一个很重要的、衡量公司盈利能力的概念。
• Gain/Loss
  Gain 和 loss 是一对反义词，用在已经有"Change(变化)"的前提上，
  区分出Change对主体权益的影响是Positive或Negative。
  • 一种是资产买卖的盈亏，这时这些钱已经盈利到账或亏损了。
    ——这一笔交易已经实现了，比如股票投资举例, 你买了100股，
    买15\(/股,卖20\)/股，这时盈利500\((Positive)，就是Capital **Gain**， 买20\)/股,卖15\(/股，这时亏损500\)(Negative)，就是Capital Loss，
    即:
    ① 前提是 "Profit 有了Change"，
    ② 进一步用 "Gain" 指示Change的 "Positive"。用 "Loss"指代"Negative"的。
  • 另一种情况是Unrealized gain or loss(有预期但待实现的盈亏)，
    这种记在 "所有者权益"，调整的是资产平衡表(GAAP规定），每年都要根据财年市值调整。

• Income 指企业或个人的 进账（？），对比Revenue(营业支出)的话范围更多，还有非收入进账、捐赠什么，
  例如investment income, dividend income也包含；

• Revenue特指营业支出，首先是"Operating Activities(营业行为)"有关的，其次是"Expenditure(支出)"；
  换一种说法，The Revenue Budgets sets out
  the EXPENDITURE PLANS for THE RUNNING COSTS of THE BUSINESS.

  • What are we trying to achieve?
    An effective and efficient allocation of resources to achieve the company plan.
  • What do many businesses have?
    A discredited process which everyone ignores.

• Sales 特指通过销售（商品、服务etc）获得的收入；

• Profit泛指利润，即有一个Sales(销售收入)扣除Cost(成本, )的概念；

• Interests特指"Operating Interests(运营利润)"；

• Earning指税后所得，常要跟在某个主语后面的，比如shareholders' earnings；

• Gain强调"POSITIVE RESULT(增益)"，有两个概念: CHANGE(增减动态变化)+POSITIVE(有益)"在，
  而且，Gain 与 Loss 成套出现的，可以有正负号；

​sale:销售， revenue:收入；income:可用于指企业的利润及个人收入

• Sales
• • Cost
• • OE(Operating Expense)
• • IE(Interests Expense)
• • Tax
• • Divided

Sales(Revenue)-Cost =GP(Gross Profit)
GP(Gross Profit)- OE(Operating Expense)=perating profit
OP(Operating Profit-IE(Interest Expense)=Interest
Interest-Tax=Earnings

DuPont Identity + Fomula + Model + Analytical Method

注意: DuPont Analysis用的是 \(\large NPM\), 应当没有计入 "TAX(Gov. 税收)"部分，
NET INCOME(净收入) 如果用 "EARNINGS(税后Interests)" 或 R.P.(RETAINED PROFIT), 即用:

• \(NPM= \dfrac{Net\ Income}{Sales}\)
• \(EM(Earnings Margin)= \dfrac{Earnings}{Sales}\)
• \(RPM(Retained Profit Margin)= \dfrac{Retained Profit}{Sales}\)

就能得到更优更好的更全面的分析结果。

Corporate Finance Institute
Menu > Resources > Accounting > DuPont Analysis
https://corporatefinanceinstitute.com/resources/accounting/dupont-analysis/

DuPont Fomula

Equilibrium Laws of Open Markets enforce that
ROE AND ITS CHANGE EXISTING SIGNIFICANT PATTERNS at EACH STAGE OF THE LIFECYCLE OF A BUSINESS.

\[\large \begin{array}{rll} \bf{ ROE } &=& \bf{ \text{ NPM × TAT × EM }} \\ \bf{ \text{ NPM }} & : & \text{ Net Profit Margin } \\ \bf{ \text{ TAT }} & : & \text{ Total Asset Turnover } \\ \bf{ \text{ EM }} & : & \text{ Equity Multiplier } \end{array} \]

Written by: CFI Team
Published: March 19, 2020
Read Time: 5 minutes

What is DuPont Analysis?

In the 1920s, the management at DuPont Corporation developed a model called DuPont Analysis for a detailed assessment of the company’s profitability.
DuPont Analysis is a useful tool that may help us to avoid misleading conclusions regarding a company’s profitability.

DuPont Analysis - ROE Breakdown Diagram

The analysis of a company’s profitability involves some nuances.
For example, in the ROE formula, we use the book value of the company’s common equity.

The said calculation method may be misleading, as it requires that we MUST BE SURE what caused the change in common equity.
To stop erroneous conclusions based on the ROE analysis,
we can use a more in-depth analysis of this measure.

Profitability and ROE

Profitability is a measure of a business’s ability to generate earnings relative to its expenses and other costs.
It is one of the most important metrics for the evaluation of a business’s success.

ROE(Return on Equity) is a commonly used accounting ratio that assesses a company’s profitability.
It represents the amount of profit returned as a percentage of the amount of money the shareholders invested.
The ROE is calculated by:

ROE may provide useful insights about the company’s performance, as we can easily define the benchmark for this measure.

• For example, if you are an investor looking for new investment opportunities,
  you can easily compare the ROE of different companies and choose the one with the highest metric,
  as it promises to return you the biggest profit for the amount of money invested.

Basic DuPont Model

The basic DuPont Analysis model is a method for:
breaking down the original ROE equation into three components:

• Operating Efficiency,
• Asset Efficiency,
• Financial Leverage.

HOE THE THREE COMPONENTS ARE MEASURED:

• Operating efficiency is measured by:
  the NPM(Net Profit Margin) and indicates the AMOUNT of NI(net income) generated PER Dollar of SA(Sales Amount).
• Asset efficiency is measured by:
  the TAT(Total Asset Turnover) and represents the SA(Sales Amount) generated PER Dollar of Assets.
• Financial Leverage is determined by:
  the Equity Multiplier.

Basic DuPont Model

Figure 1. Basic DuPont Model
The equation for the basic DuPont model is as follows:

Basic DuPont Model - Formula

We can also represent the components as ratios:

ROE Breakdown Formula

NPM× TAT for the OPERATIONS of the BUSINESS

The first two components assess the OPERATIONS of the BUSINESS.
The larger these components, the more productive the business is.

However, it is worth mentioning that, Equilibrium Laws of Open Markets enforce that:
depending on the industry in which the company operates*,
NPM(Net Profit Margin) and TAT(Total Asset Turnover) tend to trade off with each other.

• For example,
  • a machinery manufacturer is likely to
    generate a low turnover of assets and require some heavy investments;
    thus, this company will probably see a high profit margin to offset the low turnover.
  • a fast-food restaurant is likely to
    see high asset turnover but a much smaller profit margin due to the lower prices.

EM(Financial Leverage) for Financial Activities

The last component, financial leverage, captures the company’s financial activities.
The MORE LEVERAGE THE COMPANY TAKES, the HIGHER THE RISK OF DEFAULT.

Nevertheless, even if the company operates in the world in which there is no probability of default, additional leverage still results in a negative effect on ROE. Additional leverage means that the company needs to pay more interest, which lowers the net income. Subsequently, the company sees a lower Net Profit Margin.

A Five-Step DuPont Model

The basic DuPont Analysis model does not isolate the operating activities from the financing activities.
It was obvious from our observation regarding the relationship between leverage and profit margin.

A five-step DuPont model helps to solve this problem.
In the model, in order to isolate operations and financial impacts on ROE,
we will FURTHER BREAK DOWN the COMPONENTS USED in the BM(Basic Model).

• First of all, break down the NPM(Net Profit Margin) by:
  
• Afterward, we can isolate the effect of the interest expense on Net Profit Margin:
  
• After rearranging the components in the formula, we will get:
  

Net Proft Margin Formula

In the above model, we managed to separate the effect of interest expense on the Net Profit Margin. Thus, if the company increases its leverage, we will be able to see whether this action will influence its net income or boost its ROE. Obviously, the model provides a more in-depth analysis of the drivers behind the ROE changes.

DuPont analysis is one of many metrics used to evaluate companies.

Additional Resources

Thank you for reading CFI’s guide to DuPont Analysis.
To learn more and advance your career, see the following CFI resources:

• Analysis of Financial Statements
• Scenario Analysis
• Sensitivity Analysis
• Projecting Income Statement Line Items

• See all Accounting resources

• See all Financial Modeling resources

• See all FP&A resources

Corporate Finance Institute (CFI) A+ BBB Business Review
SOC for Service Organizations
© 2015 to 2026 CFI Education Inc.