Quote Originally Posted by Halebop View Post
Dupont Formula isn't much in vogue but I think the Return on Equity version is easier to work with if expressed as:

(Net Income / Sales) * (Sales / Total Assets) * (Total Assets / Avg Equity)

So based on your numbers above (Sales I think are $5.562b) but adjusting out extraordinary movements in earnings (Earnings back down to $955m)...

=(955/5562) * (5562m/8176) * (8276/3604)
=0.1717 * 0.6803 * 2.296
=0.2681
=26.81%

Personally, I'd just go for ROE as Net Income / Avg Equity (or more simply End of Year Equity)...
Halebop,

The two formulae you quoted are exactly the same??

The sales & total assets being both a denominator & numerator simply cancel out?

In your example total assets are calculated as $8,176b and then $8,276b. What is the $100m adjustment?

Cheers