Previous Page  


How Does Union Pacific Boost Its Returns?http://www.fool.com/investing/general/2012/06/29/howdoesunionpacificboostitsreturns.aspx
Jim Royal
As investors, we need to understand how our companies truly make their money. A neat trick developed for just that purpose  the DuPont formula  can help us do so. So in this series we let the DuPont do the work. Let's see what the formula can tell us about Union Pacific (NYSE: UNP ) and a few of its peers. The DuPont formula can give you a better grasp on exactly where your company is producing its profit and where it might have a competitive advantage. Named after the company where it was pioneered, the formula breaks down return on equity into three components:
What makes each of these components important?
Generally, the higher these numbers, the better. That said, too much debt can sink a company, so beware of companies with very high leverage ratios. So what does DuPont say about these four companies?
