Consulting Best Practices

DuPont Method: A Smart Pick for Consultants

DuPont Method is a business term to calculate return-on-equity (ROE) by breaking it into three parts— profitability, asset efficiency, and leverage. Calculating all these elements together can help in finding the root cause of the change in ROE. For a consulting firm, projects need to be profitable and have operational efficiency. Using DuPont method, a consulting firm can determine if their venture is a profit-creator or a profit-burner. The upsurge in ROE is a sign that the company is capable of making profits without adding new equity into the venture. This dilutes the ownership share of the existing shareholders. Click on the following link to learn the methods of ROE calculation using DuPont method:

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