| Du
Pont Analysis |
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A
method of performance measurement that was started by the DuPont Corporation
in the 1920’s and has been followed by them ever since. Using this
method, assets are measured at their gross book value rather than
at net book value in order to produce a higher ROI.
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It
is believed that measuring assets at gross book value removes the
incentive to avoid investing in new assets, which can occur as financial
accounting depreciation methods artificially produce lower ROI’s in
the initial years that an asset is placed into service. |
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Dictionary
