The DuPont equation shows the relationships among asset management, debt management, and -Select- liquidity, market, profitability. Management can use the DuPont equation to analyze ways of improving the firm's performance. Its equation is:

Ratio analysis is important to understand and interpret financial statements; however, sound financial analysis involves more than just calculating and interpreting numbers. -Select-Quantitative, Qualitative, Foreign factors also need to be considered.