The Du Pont Model: Evaluating Alternative Strategies in the Retail Industry‪.‬

INTRODUCTION The Du Pont model is a timeless and elegant model of financial analysis that has been used by analysts and educators for almost a century. Most academic or professional books on financial analysis use some form of the Du Pont model to provide insight into return on assets (ROA) or return on equity (ROE). An effective presentation of the Du Pont model can be found in a book by Palepu and Healy (2008), who use a modified version of DuPont to evaluate management's execution of competitive strategy. They hypothesize a connection between the Du Pont factors, net operating income to sales and asset turnover ratios, and a firm's competitive strategy (cost leadership or differentiation).