03-04-2013, 10:55 AM
(This post was last modified: 03-04-2013, 11:05 AM by specuvestor.)
Dupont breakdown is important for new investors to have a gauge of their return on capital deployed.
But for intrinsic earning power, long term value investors should look at ROA as better guage, which is just your Dupont formula divided by leverage, or simply NPM X Asset Turn. But nothing beats the grunt work of analysing the cashflow returns in detail and understanding the business, unless you are a quant guy
But for intrinsic earning power, long term value investors should look at ROA as better guage, which is just your Dupont formula divided by leverage, or simply NPM X Asset Turn. But nothing beats the grunt work of analysing the cashflow returns in detail and understanding the business, unless you are a quant guy

Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
Think Asset-Business-Structure (ABS)