The DuPont identity presented in the chapter is commonly referred to as the three- factor DuPont identity. Another common way that the DuPont identity is expressed is the five- factor model, which is:

Derive the five-factor DuPont identity (EBT is earnings before tax, but after interest). What does each term measure?

Transcribed Image Text:

Net income EBT、 EBIT - EBT-x EBIT x Sales x Total assets x Sales Total assets Equity ROE = ×- ×