Step 5 Checking the Return on equity objective

THE ROE MODEL IS A GOOD TOOL TO EVALUATE PAST PERFORMANCE OF THE COMPANY.

THE SAME MODEL COULD ALSO BE USED TO CHECK ON THE VIABILITY OF NEW PRODUCTS, PROJECTS OR CHANGES THAT HAS IMPACT ON THE BOTTOM LINE.

1. Checking the ROE objective
• ROS x CTO x EM =   ROE
2. Cascading the ROE to the bottom of the Du Pont Chart
3. Profit Strategy with costs
4. Minimizing Capital employment Strategies
5. The format shows a comprehensive integrated analysis of the business.
6. It shows the linkage and the balancing   of one strategy with that of another.