The DuPont Model Decomposes the Original ROI Formula into Two

question 105

Essay

The DuPont Model decomposes the original ROI formula into two components to show the different choices managers have to improve ROI.What are the terms for the two components and how do you calculate the ratios?

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Definitions:

Monopolistically Competitive

A market structure where many firms sell products that are differentiated from one another but can act as substitutes, allowing for some control over pricing.

Shift To The Left

A term used in economics to describe a decrease in supply or demand, represented graphically by a leftward shift of the supply or demand curve.

Monopolistically Competitive

An economic setup in which a variety of businesses market goods that are comparable yet distinct, enabling them to have some market control and differentiate their offerings.

Guaranteed A Profit

An assurance that an investment or business endeavor will yield a positive return or profit.