I have been looking at this company and if I calc the ROE using the formula NI/Equity I get 22% and if I use the three factor dupont model I get 45%, is this unusual? I have triple checked and I am sure I am plugging in the right numbers but the results don’t match
Clearly something is wrong, post the example or data as the difference is clearly more than a rounding error.
It must exactly match, if you are putting your numbers correctly. You have already checked your numbers. You may want to check the formula for breakup you are using. For 3 factor Dupont Model, it should be Net Profit Margin, i.e. NI / Sales x Asset Turnover, i.e. Sales / Total Assets x Leverage, i.e. Total Assets / Equity Please double check various numerators and denomenators to check if you correctly placed them. Edit: Note that these numerators and denominators cancel each other out and you are left with NI / Equity in the end. So, if you put your numbers correctly, it should EXACTLY match.
Also, be careful that all the inputs are consistant…i.e. interchanging beginning value, average or ending value of the inputs could signifigantly change results