Many companies like to use what we call the Dupont Equation to describe the return to investors. This equation breaks down profitability, the efficiency of the firm in using their assets and of course their ability to use leverage to their advantage.
Now please describe all of the components of the equation describing the importance of each one and which one do you think is most important.
Also please tell us which industries this type of equation works best and which industries this equation would not apply.
What is the DuPont equation, and how does it capture the nature of expense control, efficiency of asset management, and financial leverage (or debt) of a firm? If you were the CFO of your firm (or a hypothetical firm), what variable would you concentrate your eff orts on and why? makesure properly cite your work if you are borrowing anything