... This is called the Dupont Formula: Dupont Formula ROE
= profit margin ×
asset turnover × financial leverage ROE
= (annual net profit ÷ sales) × (sales ÷
assets) × (
assets ÷ shareholders» equity) ROE
= annual net profit ÷ shareholders» equity NasdaqGS: MRVL Last Perf Nov 28th 17 Basically, profit margin measures how much of revenue trickles down into earnings which illustrates how efficient MRVL is with its cost management.