BAR Financial Analysis · Updated November 2026
ROE Went Up. Was the Company Actually More Profitable?
DuPont analysis explains why ROE changed instead of stopping at the final percentage.
Profit margin
Measures how much profit the company generates per dollar of sales.
Asset turnover
Measures how efficiently assets generate sales.
Equity multiplier
Measures the degree of financial leverage.
Three-part DuPont
A common framework is profit margin multiplied by asset turnover multiplied by equity multiplier equals ROE.
The takeaway
ROE can rise because margins improved, assets became more productive, or leverage increased. Those are economically different stories.
Related Summit guides
FAQ
Can leverage increase ROE?
Yes.
Is higher ROE always proof of stronger operations?
No.
Does asset turnover measure profit per sale?
No.