Microsoft Dupont Analysis Of Microsoft Dupont Analysis Essay

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Microsoft DuPont DuPont Analysis of Microsoft

DuPont Analysis Overview

The DuPont Analysis is a type of analysis that provides a more detailed look at a company's Return on Equity (ROE) by breaking it into three main components. The three components are profit margin, asset turnover and a leverage factor. By separating the ROE into these smaller categories, investors can quickly identify how effectively or efficiently a company is using their resources. If any of the three categories is performing poorly then this can lower the overall figure. To calculate a firm's ROE through Du Pont analysis, multiply the profit margin (net income divided by sales), asset turnover (sales divided by assets) and leverage factor (total assets divided by shareholders' equity) together - the higher the result, the higher the return on equity.

Microsoft's Profit Margin

Profit Margin = net income / total revenues

Income Statement

Revenue (ttm): 72.93B

Net Income: 15.46B

Profit Margin

15.46 / 72.93 = 22%

...

Microsoft obviously operates much differently than many brick and motor business such as retail establishments. However, when compared to companies in similar industries then this can help identify different aspects to the company and the industry. For example, Apple's profit margin is roughly 24% while MS was calculated to be only 22%. While the difference is only a couple of percent, both MS and Apple have billions in assets and revenues so 2% makes a rather…

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