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    The Dupont Chart As An Analysis and Reporting Tool: Click Mouse To View Slides

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    The document discusses the DuPont chart as a tool for analyzing and reporting on financial performance. It provides examples of how the DuPont chart can be used for benchmarking companies and tracing the causes of off-plan financial performance. The DuPont chart breaks down return on equity into operating margins, asset turnover, and financial leverage in order to identify the drivers of overall performance at different levels of the organization. It is presented as an innovative reporting format that allows quickly understanding the factors influencing business results.

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    The Dupont Chart As An Analysis and Reporting Tool: Click Mouse To View Slides

    Uploaded by

    Tilak
    21 views5 pages
    The document discusses the DuPont chart as a tool for analyzing and reporting on financial performance. It provides examples of how the DuPont chart can be used for benchmarking companies and tracing the causes of off-plan financial performance. The DuPont chart breaks down return on equity into operating margins, asset turnover, and financial leverage in order to identify the drivers of overall performance at different levels of the organization. It is presented as an innovative reporting format that allows quickly understanding the factors influencing business results.

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    Duponts by Morrison

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    The document discusses the DuPont chart as a tool for analyzing and reporting on financial performance. It provides examples of how the DuPont chart can be used for benchmarking companies and tracing the causes of off-plan financial performance. The DuPont chart breaks down return on equity into operating margins, asset turnover, and financial leverage in order to identify the drivers of overall performance at different levels of the organization. It is presented as an innovative reporting format that allows quickly understanding the factors influencing business results.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPS, PDF, TXT or read online from Scribd
    Download as pps, pdf, or txt
    21 views5 pages

    The Dupont Chart As An Analysis and Reporting Tool: Click Mouse To View Slides

    Uploaded by

    Tilak
    The document discusses the DuPont chart as a tool for analyzing and reporting on financial performance. It provides examples of how the DuPont chart can be used for benchmarking companies and tracing the causes of off-plan financial performance. The DuPont chart breaks down return on equity into operating margins, asset turnover, and financial leverage in order to identify the drivers of overall performance at different levels of the organization. It is presented as an innovative reporting format that allows quickly understanding the factors influencing business results.

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    You are on page 1of 5

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    The Dupont Chart as an Analysis and Reporting Tool

    Morrison & Associates San Francisco

    Dupont Chart Evolution


    Strategic Drivers Operating Drivers
    Revenue/ customer Customer service level Receivables policy Sourcing costs

    Original DuPont Chart


    Price Margin Cost ROI W/C Turnover NFA
    Financing Contribution

    The idea has been extended forward to shareholder value. High-Level Financial Drivers

    Industry attractiveness

    Competitive position

    ROE

    ..and back to the operatingDupont chart* The Original and strategic drivers of value. simple relationship: showed the

    Cash Flow NI Growth Sales

    Value

    Net Showing the trade-offs for creating Income Net Income Capital value is particularly helpful to non- Employed Employed Sales Capital Cost of financial managers. Capital
    * Invented in 1919 by a Dupont engineer who joined the finance department
    Morrison & Associates
    2

    Benchmarking Example
    Wal-Mart vs. General Merchandise Retailers Index
    Cash Turn
    1823
    75

    EBIT Margin
    7.3% 8.9%

    Financing Contribution NOPAT Margin


    4.5% 4.5% 9.9% 5.1%

    A/R Turn
    93 5

    Pre-Fin. Tax
    2.8% 3.5%

    ROE
    37% 17%

    Inventory Turn
    7.8 6.3

    Prepaid Exp. Turn


    1075 153

    CA Turn
    7.1 2.7

    ROI
    27% 12%

    Higher Same Lower Key


    General Merchandise Retailer Index

    W/C Turn
    17 5

    Capital Turn
    6.0 2.7

    Payables Turn
    19 12

    CL Turn
    12 6

    Wal-Mart

    Other CL Turn
    32 12

    NFA Turn
    9.1 6.0

    XX

    YY

    The Dupont chart is highly useful for benchmarking. Here we see that Wal-Mart can sustain lower margins because it turns its assets much faster than its average competitor.
    Morrison & Associates
    3

    Performance Reporting
    DuPont Format Example
    Operating Margin NOPAT Margin
    17.7% .90 19.6%

    Gross Margin
    32.4% .98 33.1%

    Revenue ($M)
    1152 .89 1293

    31%
    .93 33%

    Corp Expense
    0.4% .22 1.8%

    Cost of Goods
    -788 .89 -883

    Standard Cost
    -741 .86 -857

    Taxes (% of Sales)
    -13.2% .98 -13.5%

    Good Will Amortization


    -2.0% 1.07 -1.9%

    Hedging Gains
    15 .55 27

    Labor Variances
    -12 2.4 -5

    ROCE
    19% .82 23%

    Working Capital Turnover


    -29 .50 .50

    Material Variances
    -40 8.0 -5

    -59

    Fixed Asset Turnover


    1.43 .94 1.52

    Receivables Turnover
    10.3 .79 .79 13.0

    Mfg OH Variances
    +5 NA -16

    Capital Turnover
    1.05 .91 .91 1.16

    Tax Liabilities Turnover


    -4.35 1.02 -4.26

    Payables Turnover
    -8.3 .91 -9.2

    As an innovative reporting tool, the Dupont chart allows quickly tracing the causes of off-plan performance.

    Other Turnover
    1.85 .86 2.15

    Inventory Turnover
    9.2 1.33 6.9

    Key
    Actual + Forecast Index Budget

    Foreign Exchange Adjustment


    -.01 NA .02

    Morrison & Associates


    4

    For more information on Dupont charts or Strategy consulting Shareholder value consulting William A. Morrison Morrison & Associates 220 Sansome Street Suite 1100 San Francisco, CA 94104 USA 415-296-0960 [email protected]

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