Join Jim Stice for an in-depth discussion in this video The DuPont framework, part of Finance for Non-Financial Managers.
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- Okay, as we saw Uncertain had…a return return on equity of 9.3%, not good.…Benchmark had a return on equity of 20.3%. Very good.…Now, anybody can see that Benchmark is higher than Uncertain…when it comes to return on equity.…Turns out we can now either be…a problem pointer or a problem solver.…Anybody can see that Uncertain has a problem.…What we want to know is why do they have a problem?…And that brings us in all its glory to the DuPont Framework.…
Now the DuPont Framework has three components:…profitability, efficiency, and leverage.…Let's start with leverage,…because that's the thing we do first.…When it comes to leverage that's an indication…of how much money have we borrowed to purchase assets.…Now why do we purchase assets?…We purchase assets in hopes of generating sales.…The leverage measure tells us of our assets…how many were acquired with the equity…that's been put into the company.…We've borrowed to buy.…
It gives us a measure of how much…we've borrowed to buy assets.…And why do we buy assets?…To generate sales.…
- Interpret financial reports and make decisions based on available data
- Manage inventory and receivables
- Create an accurate budget
- Cost a product or service
- Analyze customers
- Understand your income taxes
- Communicate your contribution to the bottom line
Skill Level Appropriate for all
1. Understanding Finance and Accounting
2. Most Common Financial Reports
3. Techniques for Using Financial Reports
4. Short-Term Financial Management
5. Costing a Product or Service
Drafting a budget4m 59s
7. Income Taxes
Next steps1m 38s
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