 DuPont analysis is another tool to systematically analyze financial statements. We call it as DuPont Entity because this model has been introduced by a famous US firm DuPont. There is a difference between return on assets and return on equity and their difference is due to the financial leverage or the usage of debt in the business. Let return on equity is equal to net income over total equity. If we put the value therein, we get the return on equity equal to 32%. And if we multiply this ratio with assets over assets, the result would be the same 32%. But this time, we would call it as that return on equity is the product of return on assets and equity multiplier or we will call it as a return on asset into 1 plus debt equity ratio which is another name of equity multiplier. So this was the simple decomposition of return on equity. And if we decompose return on equity further and this time for this decomposing, we multiply the prana model with sales over sales so we have a model in front of which three ratios are used. Net income over sales, sales over assets and assets over total equity. If we combine this, we will say that the first two expressions i.e. net income over sales into sales over assets, we will combine these two expressions and say that we can find out the return on assets with the help of these two. And when we multiply this return on assets with the third expression, which is equity multiplier, we will call the resulting answer as return on equity. Now the third expression here is that assets over total equity is called basically due point entity because this is the expression that had been introduced by due point a famous US firm. We have three types of expressions in this model and we can define them in another way that net income over sales which shows profit margin, then we have total assets turnover and third we have equity multiplier. So first two expressions which are profit margin or total assets turnover, their combination return on asset will come. These two have a direct relation. If we increase these two, then our return on asset will increase. So when we combine them in due point entity, then we can say that we have profit margin which presents the operating efficiency and shows the efficient use of asset turnover ratio of asset while equity multiplier shows the financial leverage. Financial leverage means we can increase our return on equity but there is a problem that higher the use of debt, there would be higher amount of interest expense and resulting would be the lesser amount of net income. So as a result of this, our overall return on equity will decrease. Now these three variables have to be used in a way that depends upon the management choice. If we conclude due point ratio analysis, we can say that increasing return on equity through leverage depends upon a firm's capital and dividend policy. Then the firm will decide that to increase return on equity, it will compute its capital structure in a way, plan its dividend payments in a way. The decomposing of return on equity is a very systematic method of financial analysis and as a result of this decomposing, you can check that your return on equity will decrease. Return on equity has a big difference. This is primarily due to the usage of assets by two different entities. If any company's return on equity is deferring, then maybe one of the companies has used their assets efficiently.