Dupont Analysis

Decompose Return on Equity into component ratios to identify performance drivers. Use for financial analysis, performance benchmarking, and identifying impro...

Security Scan

This is an instruction-only DuPont analysis helper whose requested resources and runtime instructions line up with its stated financial-analysis purpose and present no disproportionate access or installation behavior.

Purpose & Capability

The skill's name and description (DuPont/ROE decomposition) match the SKILL.md contents. There are no unrelated credential, binary, or config requirements.

Instruction Scope

The SKILL.md contains templates, formulas, decomposition steps, output formatting, and guidance for analysis. It does not instruct the agent to read system files, environment variables, or to call external endpoints; it expects the user/agent to supply financial data for analysis.

Install Mechanism

There is no install spec or code to download — instruction-only — so nothing is written to disk or executed beyond the agent following the prose guidance.

Credentials

The skill declares no environment variables, secrets, or config paths. No credential access is requested or required for its stated function.

Persistence & Privilege

always is false (not force-included) and the skill does not request persistent system presence or modify other skills or system-wide settings.

Assessment

This skill is low-risk and internally consistent for performing DuPont/ROE decompositions. Before using it: (1) provide only the financial data necessary for the analysis and avoid pasting unrelated confidential credentials or sensitive PII; (2) verify any industry benchmarks you supply or ask the agent to fetch come from trusted sources; and (3) if you plan to have the agent autonomously retrieve company data, ensure network/credential access is scoped and audited — the skill itself does not request or manage credentials.

Metadata

• Name: dupont-analysis
• Description: Financial ratio decomposition for ROE analysis
• Triggers: DuPont, ROE, financial analysis, return on equity, profitability decomposition

Instructions

You are a financial analyst conducting DuPont analysis for $ARGUMENTS.

Your task is to decompose ROE into its component drivers to identify performance improvement opportunities.

Framework

The DuPont Identity

ROE = Net Profit Margin × Asset Turnover × Financial Leverage

Where:
- ROE = Net Income / Shareholders' Equity
- Net Profit Margin = Net Income / Revenue
- Asset Turnover = Revenue / Total Assets
- Financial Leverage = Total Assets / Shareholders' Equity

Extended DuPont Analysis (5-Way)

ROE = Tax Burden × Interest Burden × Operating Margin × Asset Turnover × Leverage

Where:
- Tax Burden = Net Income / EBT (Keep vs. Government)
- Interest Burden = EBT / EBIT (Creditors vs. Equity)
- Operating Margin = EBIT / Revenue (Operations Efficiency)
- Asset Turnover = Revenue / Total Assets (Asset Efficiency)
- Financial Leverage = Total Assets / Equity (Capital Structure)

Analysis Tree

ROE (Return on Equity)
├── ROA (Return on Assets)
│   ├── Net Profit Margin
│   │   ├── Gross Margin
│   │   │   ├── Revenue
│   │   │   └── COGS
│   │   ├── Operating Expenses
│   │   │   ├── SG&A
│   │   │   ├── R&D
│   │   │   └── Depreciation
│   │   ├── Interest Expense
│   │   └── Taxes
│   └── Asset Turnover
│       ├── Revenue
│       └── Total Assets
│           ├── Current Assets
│           │   ├── Cash
│           │   ├── Receivables
│           │   └── Inventory
│           └── Non-Current Assets
│               ├── PP&E
│               └── Intangibles
└── Financial Leverage
    ├── Total Assets
    └── Shareholders' Equity
        ├── Common Stock
        └── Retained Earnings

Output Process

1. Gather financial data - Income statement, balance sheet
2. Calculate base ratios - ROE, ROA, margins, turnover
3. Decompose systematically - Work through the tree
4. Compare to benchmarks - Industry peers, historical trends
5. Identify drivers - What's helping? What's hurting?
6. Recommend improvements - Specific actions

Output Format

## DuPont Analysis: [Company]

### Summary Metrics

| Metric | Value | Industry Avg | Assessment |
|--------|-------|--------------|------------|
| ROE | X% | Y% | ⬆️/⬇️/➡️ |
| ROA | X% | Y% | ⬆️/⬇️/➡️ |
| Net Profit Margin | X% | Y% | ⬆️/⬇️/➡️ |
| Asset Turnover | X | Y | ⬆️/⬇️/➡️ |
| Financial Leverage | X | Y | ⬆️/⬇️/➡️ |

### 3-Way Decomposition

ROE = NPM × AT × FL X% = Y% × Z × W

Example: ROE = 15% = 5% × 1.5 × 2.0

### 5-Way Decomposition (Extended)

| Component | Value | Interpretation |
|-----------|-------|----------------|
| Tax Burden | X% | % of profit kept after tax |
| Interest Burden | X% | % of EBIT left after interest |
| Operating Margin | X% | Core business profitability |
| Asset Turnover | X | Revenue per dollar of assets |
| Leverage | X | Assets per dollar of equity |
| **ROE** | **X%** | **Result** |

### Driver Analysis

**What's driving ROE?**

| Driver | Impact | Trend | Action Needed |
|--------|--------|-------|---------------|
| [Driver 1] | ⬆️ Positive | Improving | Continue |
| [Driver 2] | ⬆️ Positive | Stable | Maintain |
| [Driver 3] | ⬇️ Negative | Worsening | Address |
| [Driver 4] | ⬇️ Negative | Stable | Improve |

### Improvement Opportunities

**To improve Net Profit Margin:**
1. [Opportunity 1]
2. [Opportunity 2]

**To improve Asset Turnover:**
1. [Opportunity 1]
2. [Opportunity 2]

**To optimize Capital Structure:**
1. [Opportunity 1]
2. [Opportunity 2]

### Peer Comparison

| Company | ROE | NPM | AT | FL | Strategy |
|---------|-----|-----|----|----|----------|
| [Subject] | X% | Y% | Z | W | [Description] |
| Peer A | X% | Y% | Z | W | [Description] |
| Peer B | X% | Y% | Z | W | [Description] |
| Industry Avg | X% | Y% | Z | W | - |

Tips

• Use 3-5 year averages to smooth volatility
• Compare against industry peers, not just absolute values
• High leverage increases ROE but also risk
• ROE can be manipulated through buybacks and debt
• Look for sustainable drivers, not one-time gains
• Combine with RONA analysis for operational view
• Different business models optimize different components
• Lenders care more about interest coverage; shareholders about ROE