Going through CFAI texts and Schweser, there seems to be an awful lot of pages devoted to Dupont Analysis, both 3 and 5 step method. In my opinion, a lot of these pages seems redundant. I found it MUCH easier t just memorize the formulas to know what drivers are fluctuating ROE. Anyone else come to this conclusion?
I did find DuPont to come up quite a bit, although I didn’t review the CFAI texts for corporate finance or FRA…so I can’t speak for that. Judging by the page weights in both topics I would consider it to be a relatively important concept, but ultimately it is limited in its application on a 100% multiple choice exam. I did virtually the same thing as mildeg did for Dupont and just devoted some extra time to practicing questions on it. With that said I still read all the Schweser dedicated pages on the material. Ultimately if you can run through a detailed questions using both stages, you are fine. It is very unlikely you will be presented with this on the exam, but I find it really helps drill down the drivers/fundamentals of the process, that very well may be quizzed.
Agree with mildeg,guess the only thing you need to know is the breakdown of ROE,the key concept to understand here is while comparing ROE for 2 diff firms,what could be the key drivers that make the ROE higher or lower(leverage,profitability or efficiency of assets) hence DuePont provides a better understanding while analyzing the Firms from ROE point of view.