Today Interesting Concept to learn - *Dupont Analysis*🙇🏻

Before understanding a Dupont Analysis we have to understand few concepts - 1) Return on Equity :- 📍 You and your friend starts momos business 📍 Both of you invested 1000 each to buy flour, veggies, all etc. 📍At the end of the day you made "Net Profit of ₹ 700 ROE = 700/1000 = 70% This is how much profits you made for every ₹ Invested ROE - (Practical Example of TCS in crore) 📍Net Profit of TCS for FY2023 = 42,303 📍Shareholder's (Equity sharecapital fund as + Reserve) = 90,442 📍ROE = NP/ SHF = 42303/90442 = 46.77% it means that for every ₹ of shareholders money TCS has generated 46 paisa. 2) Return on asset :- 📍You have expanded the mamos business and bought a cart, intensils etc. 📍Now you have total Assets of 1500 📍Your Net profit is 800 📍Return on Asset = 800/1500 = 53.3% it means that How much you are earning on each ₹ Invested. Practical - Return on Asset of TCS 📍Net Profit of TCS for FY2023 = 42303 📍Total Asset for TCS as on Mar'23= 142859 📍 Return on Asset = NetProfit/Total Asset = 42303/142859 = 29.6% it means that TCS is earning 29 paisa on each Rupee invested in business. 3) MOAT :- Most is the advantage of business through which its earning above normal 📍Pricing Power - is a MOAT (Cigarette) 📍Operating Efficiency - is a MOAT ( DMART ) 📍 Legacy of Business - is a MOAT (Tata) 4) What does deport Analysis do? 📍It breaks down ROE & ROA so one can understand the reason why ROE/ROA is increasing or decreasing. 📍Dupont Analysis is crucial to understand moat of any business. ______________________________________________ A Dupont Analysis on Ircon International made by me for a example look like this, 📍If you have read it till the end, Thanks for reading it. You may have liked it and definitely got a value addition from this post:)