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Click mouse to view slides. The Dupont Chart as an Analysis and Reporting Tool. Morrison & Associates San Francisco. Strategic Drivers. Operating Drivers. Original DuPont Chart. The idea has been extended forward to shareholder value. Price. Revenue/ customer. Mar- gin.

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Presentation Transcript
dupont chart evolution

Strategic

Drivers

Operating

Drivers

Original DuPont Chart

The idea has been extended forward to shareholder value.

Price

Revenue/customer

Mar-gin

Industryattract-iveness

Cost

High-LevelFinancial Drivers

Customer

servicelevel

ROI

W/C

Receiv-ablespolicy

Compe-titive

position

Turn-over

ROE

NFA

Sourcingcosts

CashFlow

FinancingContribution

..and back to the operating and strategic drivers of value.

The Original Dupont chart* showed the simple relationship:

NIGrowth

Value

Cost ofCapital

* Invented in 1919 by a Dupont engineer who joined the finance department

Dupont Chart Evolution

Showing the trade-offs for creating value is particularly helpful to non-financial managers.

benchmarking example wal mart vs general merchandise retailers index

FinancingContribution

Cash Turn

1823

EBIT Margin

9.9%

75

5.1%

NOPAT Margin

7.3%

8.9%

A/R Turn

4.5%

93

5

4.5%

Pre-Fin. Tax

ROE

Inventory Turn

2.8%

37%

3.5%

17%

7.8

6.3

ROI

Prepaid Exp. Turn

CA Turn

27%

1075

7.1

12%

153

2.7

Higher

W/C Turn

Same

CapitalTurn

17

5

Lower

6.0

Payables Turn

CL Turn

2.7

19

12

6

12

Key

NFA Turn

General Merchandise Retailer Index

Other CL Turn

Wal-Mart

9.1

6.0

32

12

XX

YY

Benchmarking ExampleWal-Mart vs. General Merchandise Retailers Index

The Dupont chart is highly useful for benchmarking.

Here we see that Wal-Mart can sustain lower margins because it turns its assets much faster than its average competitor.

performance reporting dupont format example

Gross Margin

Revenue ($M)

32.4%

1152

Operating

Margin

.89

.89

.98

.98

33.1%

1293

31%

NOPAT

Margin

Standard Cost

Corp Expense

Cost of Goods

.93

.93

33%

0.4%

-741

-788

.22

.89

.86

17.7%

Taxes

(% of Sales)

1.8%

-883

-857

.90

.90

Good Will

Amortization

19.6%

Labor Variances

Hedging Gains

-13.2%

.98

-2.0%

-12

15

-13.5%

.55

1.07

2.4

-5

-1.9%

27

Working Capital

Turnover

Material Variances

ROCE

-40

19%

-29

8.0

.50

.50

.82

.82

-5

-59

23%

Receivables Turnover

Mfg OH Variances

Fixed Asset Turnover

+5

10.3

1.43

.79

.79

NA

.94

13.0

-16

1.52

Capital

Turnover

Payables Turnover

Tax Liabilities Turnover

-8.3

1.05

-4.35

.91

.91

.91

1.02

-9.2

1.16

-4.26

Inventory Turnover

As an innovative reporting tool, the Dupont chart allows quickly tracing the causes of off-plan performance.

Other Turnover

Key

9.2

1.85

1.33

.86

6.9

2.15

Actual + Forecast

Actual + Forecast

Index

Index

Foreign Exchange Adjustment

Budget

Budget

-.01

NA

.02

Performance ReportingDuPont Format Example
slide5

For more information on Dupont charts or

  • Strategy consulting
  • Shareholder value consulting
  • William A. Morrison
  • Morrison & Associates
  • 220 Sansome Street
  • Suite 1100
  • San Francisco, CA 94104 USA
  • 415-296-0960
  • BillMorrison@compuserve.com