Time to Retire for DuPont Analysis. A Waterfall Chart Alternative

Abstract

This paper argues that it is retirement time for the centenarian DuPont return analysis. It proposes an alternative based on depicting financial statements in a waterfall chart centered around total revenue. Waterfall charts may be drawn for different periods and companies, showing the relative position and dynamics of a company in relation to its industry and competitors. An advantage of the waterfall method is to highlight the link between total revenue and the balance sheet, and the role played by the turnover residuals. Illustrative charts are complemented with the respective analytics.

Keywords: DuPont Analysis, Financial Analysis, Waterfall Charts, Corporate Finance, Financial Markets

JEL Classification: G30, G35, B24, O16