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DuPont ROE calculator and formula

Published August 17, 2026

DuPont writes ROE as net margin times asset turnover times the equity multiplier. On $45,000 of net income, $500,000 of sales, $800,000 of assets and $300,000 of equity, the three read 9 percent, 0.625 and 2.67, and the product is 15 percent.

DuPont ROE

15.00%

Margin 9.00%, turnover 0.625, multiplier 2.67.

Net margin: 9.00%
Asset turnover: 0.625
Equity multiplier: 2.67
ROA: 5.63%
ROE: 15.00%

Net income

Profit after interest and tax.

Revenue

Sales for the same period as net income.

Total assets

Book assets. The equity multiplier is assets over equity.

Book equity

Shareholders' equity, not market cap.

The formula

ROE = \frac{\text{NI}}{\text{Sales}} \times \frac{\text{Sales}}{\text{Assets}} \times \frac{\text{Assets}}{\text{Equity}}

Net margin times asset turnover times the equity multiplier. The product is net income over equity, which is ROE. ROA is the first two steps.

Three pieces that have to multiply back

A 15 percent ROE can be a wide margin, fast turnover, or a large equity multiplier. DuPont writes those three so you can see which:

$ROE = \underbrace{\frac{NI}{Sales}}_{margin} \times \underbrace{\frac{Sales}{Assets}}_{turnover} \times \underbrace{\frac{Assets}{Equity}}_{multiplier}$

On $45,000 of net income, $500,000 of sales, $800,000 of assets and $300,000 of equity: margin is 9 percent, turnover is 0.625, multiplier is 2.67. Product: $0.09 \times 0.625 \times 8/3 = 0.15$ , 15 percent. ROA is the first two steps: $0.09 \times 0.625 = 0.05625$ , 5.625 percent. Times 2.67 is 15 percent again.

The calculator on this page is that product. How ROE works is the one division that does not split the sheet.

A wider margin on a less borrowed sheet

Net income $60,000, sales $400,000, assets still $800,000, equity now $600,000. Margin is 15 percent. Turnover is 0.5. Multiplier is 1.33. ROA is 7.5 percent. ROE is 10 percent.

Margin rose. Turnover fell. The multiplier halved, from $8/3$ to $4/3$ . ROE fell from 15 percent to 10 percent even though ROA rose from 5.625 percent to 7.5 percent. That is the point of the split: a single ROE hides which piece moved.

Fast turnover, a thinner sheet

Net income $80,000, sales $1,000,000, assets $500,000, equity $400,000. Margin is 8 percent. Turnover is 2. Multiplier is 1.25. ROA is 16 percent. ROE is 20 percent.

The margin is narrower than 9 percent. Turnover is much faster than 0.625. The product is a higher ROE. Ranking firms on ROE alone ranks this sheet above the first one. Ranking on margin alone ranks it below. Both rankings are the same three numbers, weighted differently.

What this page is not doing

It is not ROIC, not a five-step DuPont, and not a claim that 15 percent is a target. The three sheets are 9 percent times 0.625 times 2.67 (ROE 15 percent, ROA 5.625 percent), 15 percent times 0.5 times 1.33 (ROE 10 percent, ROA 7.5 percent), and 8 percent times 2 times 1.25 (ROE 20 percent, ROA 16 percent). This is educational material, not financial advice.

Worked examples

Nine percent, 0.625, 2.67

Net income $45,000, sales $500,000, assets $800,000, equity $300,000. What is DuPont ROE?

Net margin: $45000 / 500000 = 0.09$ , 9 percent.
Asset turnover: $500000 / 800000 = 0.625$ .
Equity multiplier: $800000 / 300000 = 8/3$ , which prints as 2.67.
ROA, the first two steps: $0.09 \times 0.625 = 0.05625$ , 5.625 percent.
ROE: $0.09 \times 0.625 \times 8/3 = 0.15$ , 15 percent. Directly: $45000 / 300000 = 0.15$ .

Margin 9 percent, turnover 0.625, multiplier 2.67. ROA is 5.625 percent. ROE is 15 percent.

Fifteen percent, 0.5, 1.33

Net income $60,000, sales $400,000, assets $800,000, equity $600,000. What is DuPont ROE?

Margin: $60000 / 400000 = 0.15$ , 15 percent.
Turnover: $400000 / 800000 = 0.5$ .
Multiplier: $800000 / 600000 = 4/3$ , which prints as 1.33.
ROA: $60000 / 800000 = 0.075$ , 7.5 percent.
ROE: $0.15 \times 0.5 \times 4/3 = 0.10$ , 10 percent.

Margin 15 percent, turnover 0.5, multiplier 1.33. ROA is 7.5 percent. ROE is 10 percent.

Eight percent, turnover of 2, multiplier 1.25

Net income $80,000, sales $1,000,000, assets $500,000, equity $400,000. What is DuPont ROE?

Margin: $80000 / 1000000 = 0.08$ , 8 percent.
Turnover: $1000000 / 500000 = 2$ .
Multiplier: $500000 / 400000 = 1.25$ .
ROA: $80000 / 500000 = 0.16$ , 16 percent.
ROE: $0.08 \times 2 \times 1.25 = 0.20$ , 20 percent.

Margin 8 percent, turnover 2, multiplier 1.25. ROA is 16 percent. ROE is 20 percent.

The mistake that costs the most

Reading a high ROE as a high margin.

On the third sheet ROE is 20 percent and the margin is 8 percent. On the first sheet ROE is 15 percent and the margin is 9 percent. The 20 percent firm is the faster-turning, less-borrowed sheet, not the more profitable sale. Multiply the three pieces before treating ROE as an operating score.

The other error is mixing this identity with ROIC. DuPont splits accounting ROE. ROIC is NOPAT over invested capital. They are not two names for one rate.

Common questions

Does the product always equal NI over equity?

Yes, when the four inputs are from one period and one consolidation. Sales cancel, assets cancel, and what remains is net income over equity.

Where does financial leverage sit?

In the equity multiplier, assets over equity. How the equity multiplier works is that piece on its own. ROA is DuPont before that piece is applied.

Is 15 percent a target ROE?

It is $45,000 over $300,000 on the teaching sheet. This is educational material, not financial advice.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.