In finance, we could find useful information from a firm's financial statements such as annual income statement, balance sheet, and cash flow statement. Ratio analysis is one of the commonly used tools to compare the performance among different firms and for the same firm over the years. DuPont identity is one of them. DuPont identity divides Return on Equity (ROE) into three ratios: Gross Profit Margin, Assets Turnover, and Equity Multiplier:
The following code will show those three ratios with different colors. Here we have the following information about some firms:
Ticker |
Fiscal Year Ending Date |
ROE |
Gross Profit Margin |
Assets Turnover |
Equity Multiplier |
---|---|---|---|---|---|
IBM |
December 31, 2012 |
0.8804 |
0.1589 |
0.8766 |
6.3209 |
DELL |
February 1, 2013 |
0.2221 |
0.0417 |
1.1977 |
4.4513 |
WMT |
January 31, 2013 |
0.2227 |
0.0362 |
2.3099 |
2.6604 |
The Python code is as follows:
import numpy as np import matplotlib.pyplot as plt ind = np.arange(3) plt.title("DuPont Identity") plt.xlabel...