For many years, the Dupont analysis has been a popular tool to analyze the profitability of a business. By focusing on the building blocks of profitability – profit margin and asset turnover – the analysis can be extended to compute return on assets (ROA) and return on equity (ROE). While the profit margin and asset turnover ratios can be used effectively in analyzing a company's historical performance and evaluating its future potential, use of Dupont's ROA and ROE ratios can distort both performance and value. This article presents a review of the Dupont analysis and adjustments that must be made to it to achieve proper valuation conclusions.

As businesses are increasingly being built around patents, there is a growing need for business appraisers to know how to value patents, and for business executives to know how to distinguish between a comprehensive patent appraisal—and mere calculations. To help satisfy this need, this article addresses topics relevant to a professional patent appraisal.