Dupont Formula

[clip1989]

Schweser says on page 94 in Book 3 (Equity) that when calculating ROE using Dupont, to use the beginning-of-period balance sheet values unless otherwise instructed. I always thought that we are to use the average of the beginning and ending value for the balance sheet values. Does anyone have a definitive answer?
Thanks!

 

[Aether]

Use average values. If data for consecutive years is unavailable, there’s only one value to deal with - at that point, it doesn’t matter if it’s the beginning or ending value.

 

[cpk123]

ROE is the return on Equity. I believe Beginning Period Equity would be the denominator for that.
Any other ratio - average values would apply. But for ROE - it is how much was the change over beginning period Equity value.