The DuPont Model is an ideal platform for better understanding the relationship between each balance sheet, income statement and financial ratio metric and how to improve them, and setting financial goals and identifying the most achievable ways to accomplishing them.
This provides a strategic structure for proactive Profit Improvement planning that builds the overall strength of a business.
The two most revealing financial performance ratios for companies are Return on Assets (ROA) and Return on Equity (ROE). To graphically portray the relationship of these two ratios, and the financial elements used to calculate them, a customized DuPont model has been created for ‘City Cycle Company’ below.
As part of your subscription to BizBench, you will receive an DuPont Model Excel ‘What If’ Tool (see below) to run what-if scenarios for your clients. You can see below that an improvement in any of the
categories on the far left would have a ripple effect on the other metrics, flowing through to an improvement in ROA and ROE. Then run a new BizBench Report and see where the improved numbers would put them against industry numbers!
Imagine the impact of this powerful tool in shaping the future of your client’s business or your own to become an INDUSTRY LEADER!