Return on equity (ROE)by the DuPont model is a function of three ratios: net profit margin,return on assets,and financial leverage.

Net Profit Margin

A profitability metric indicating the percentage of revenue left as net income after all expenses, taxes, and costs have been subtracted.

Return On Assets

Return on assets (ROA) is a profitability ratio that measures how efficiently a company can manage its assets to produce profits during a period, calculated by dividing net income by total assets.

Financial Leverage

The use of borrowed funds (debt) to amplify returns from an investment or project.