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Facebook</category><category>Bisnis online</category><category>Blogging Strategi</category><category>tips Kesehatan</category><category>Akuntansi</category><author>noreply@blogger.com (Muhammad Syukron)</author><pubDate>Sat, 21 Jan 2012 18:47:00 PST</pubDate><guid isPermaLink="false">tag:blogger.com,1999:blog-6709278747146913924.post-1840987051994377518</guid><description>&lt;div dir="ltr" style="text-align: left;" trbidi="on"&gt;
No doubt about it: 2011 was a big year for content marketing. A recent survey conducted by my company, HiveFire, found that 82% of B2B marketers today use content marketing. And twice the number of marketers implement content marketing vs. the number of those who use print, television, and radio advertising&lt;a href="http://www.blogger.com/goog_1963249931"&gt;. &lt;/a&gt;&lt;br /&gt;&lt;a href="http://www.blogger.com/goog_1963249942"&gt;&lt;br /&gt;&lt;/a&gt;Those numbers speak for themselves. Marketers have taken note, and are recognizing content marketing as a valuable component of their overall strategy.  &lt;br /&gt;&lt;br /&gt;With so much attention focused on the progress that content marketers have made over the past year, it's impossible not to ask what 2012 might bring. Because the content marketing space is moving so fast, here is a quick look at what's in and what's out in 2012. &lt;strong&gt;Messaging&lt;/strong&gt;&lt;br /&gt;

&lt;em&gt;&lt;strong&gt;What's Out:&lt;/strong&gt;&lt;/em&gt; &lt;em&gt;Passing Off Marketing Materials as Content&amp;nbsp;&lt;/em&gt;&lt;br /&gt;
&lt;br /&gt;
&lt;br /&gt;
Companies that were new to content marketing last year have learned 
that to attract customer interest, they have to be prepared to offer 
relevant and engaging content, not just marketing materials. Gone will 
be the days of marketers singularly promoting their brands without also 
keeping an eye on industry news and trends.&lt;br /&gt;

&lt;strong&gt;&lt;em&gt;What's In:&lt;/em&gt;&lt;/strong&gt; &lt;em&gt;Incorporating Your Brand's Message Into a Larger Story&lt;/em&gt;&lt;br /&gt;

More and more, marketers will incorporate their brands' messages into
 a larger, overall story. Content produced by companies will begin to 
take on a more journalistic feel, and those marketers that are really 
getting it right won't shy away from curating content from their 
competitors as well. &lt;br /&gt;

&lt;strong&gt;Channels&lt;/strong&gt;&lt;br /&gt;

&lt;em&gt;&lt;strong&gt;What's Out:&lt;/strong&gt;&lt;/em&gt; &lt;em&gt;Traditional Content Channels&lt;/em&gt;&lt;br /&gt;

In 2011, we saw the decline of existing content channels (e.g., RSS 
feeds) and the shift to new content vehicles (e.g., Twitter). 
Increasingly, readers who seek content are moving away from sites, such 
as traditional news websites, in favor of more real-time social media 
channels. &lt;br /&gt;

&lt;strong&gt;&lt;em&gt;What's In:&lt;/em&gt;&lt;/strong&gt; &lt;em&gt;The Next Big Thing&lt;/em&gt; &lt;br /&gt;

My prediction for 2012 is that we will continue to see emerging 
content channels steal the spotlight from more-established news media. A
 new online channel (think the Google+ of 2012), a new physical channel 
(2012's answer to the tablet), and a new medium for content (the next 
infographic) are all on the calendar for the next 12 months. &lt;br /&gt;

&lt;strong&gt;Curated Content &lt;/strong&gt;&lt;br /&gt;

&lt;em&gt;&lt;strong&gt;What's Out:&lt;/strong&gt;&lt;/em&gt; &lt;em&gt;Stealing Content From Other Sources Without Proper Attribution&lt;/em&gt;&lt;br /&gt;

Companies that repurpose third-party content as their own without 
properly citing the source aren't reaping the full benefits of content 
marketing. Linking to the original source may drive traffic away from 
you momentarily, but doing so makes you more credible for identifying 
relevant content in other well-known publications.&lt;br /&gt;

&lt;strong&gt;&lt;em&gt;What's In:&lt;/em&gt;&lt;/strong&gt; &lt;em&gt;Curating Content From Multiple Sources, Including Your Competitors&lt;br /&gt;
&lt;/em&gt;&lt;br /&gt;
If your company's goal is to establish thought leadership in your 
industry by providing your customers with the most compelling and 
relevant content available, it will be impossible to do so without 
occasionally curating your competitors' content. &lt;br /&gt;

&lt;strong&gt;Search Engine Optimization &lt;/strong&gt;&lt;br /&gt;

&lt;em&gt;&lt;strong&gt;What's Out:&lt;/strong&gt; Driving SEO by Content Alone &lt;/em&gt;&lt;br /&gt;

If 2011 taught marketers anything, it is that SEO is not driven 
solely by including highly searched terms in the content that they 
create and curate. Marketers that try to optimize SEO by writing their 
content based on search queries alone will see a decline in viewership. 
Practices like that frequently police themselves, and customers will 
search elsewhere to find meaningful content that is not obviously 
marketing focused.&lt;br /&gt;

&lt;em&gt;&lt;strong&gt;What's In:&lt;/strong&gt; Viewing Your Social Media Presence as an Extension of Your Overall SEO Strategy &lt;/em&gt;&lt;br /&gt;

SEO will continue to be a major goal for marketers in 2012, but 
marketers will start taking into consideration how their presence on 
social media channels can affect SEO. Search engines are starting to 
rely on social signals more when they generate results. So a company 
that is not generating content on a variety of platforms will be missing
 out. &lt;br /&gt;

* * *&lt;br /&gt;

If some people have referred to 2011 as the "year of content 
marketing," then 2012 will be the "year of specialization within content
 marketing." As content marketing continues to prove itself as a 
successful marketing strategy, the methods of implementing it will 
become more focused. Though content curation—the process of finding, 
organizing, and sharing online content—is one approach, it is not the 
only one, and new practices will continue to emerge. &lt;br /&gt;

Given the growth of content marketing in 2011, it might be hard to 
accurately predict where it will be a year from now. However, one thing 
is clear: Content marketing is not going away any time soon. &lt;br /&gt;
&lt;div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"&gt;
&lt;br /&gt;Read more: &lt;a href="http://www.marketingprofs.com/articles/2012/6827/content-marketing-trends-for-2012-whats-in-and-whats-out#ixzz1jnWJWJ2Z" style="color: #003399;"&gt;http://www.marketingprofs.com/articles/2012/6827/content-marketing-trends-for-2012-whats-in-and-whats-out#ixzz1jnWJWJ2Z&lt;/a&gt;&lt;/div&gt;
&lt;/div&gt;&lt;div class="blogger-post-footer"&gt;This is featured post by &lt;a href="http://duniasyukron.blogspot.com/" title="Muhammad Syukron"&gt;M.Syukron,S.E&lt;/a&gt;&lt;img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/6709278747146913924-1840987051994377518?l=duniasyukron.blogspot.com' alt='' /&gt;&lt;/div&gt;&lt;div class="feedflare"&gt;
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&lt;/div&gt;&lt;img src="http://feeds.feedburner.com/~r/duniasyukron/~4/-BR2B3D-9KY" height="1" width="1"/&gt;</description><app:edited xmlns:app="http://www.w3.org/2007/app">2012-01-22T09:47:00.764+07:00</app:edited><thr:total xmlns:thr="http://purl.org/syndication/thread/1.0">0</thr:total><feedburner:origLink>http://duniasyukron.blogspot.com/2012/01/content-marketing-trends-for-2012-whats.html</feedburner:origLink></item><item><title>Tiga Cara untuk Meningkatkan SEO Dengan Twitter</title><link>http://feedproxy.google.com/~r/duniasyukron/~3/0TXiJwlw6zA/tiga-cara-untuk-meningkatkan-seo-dengan.html</link><category>Bisnis online</category><category>Blogging Strategi</category><category>Tips</category><category>umum</category><author>noreply@blogger.com (Muhammad Syukron)</author><pubDate>Fri, 20 Jan 2012 18:44:00 PST</pubDate><guid isPermaLink="false">tag:blogger.com,1999:blog-6709278747146913924.post-8748583773379490805</guid><description>&lt;div dir="ltr" style="text-align: left;" trbidi="on"&gt;
&lt;span class="" id="result_box" lang="id"&gt;&lt;br /&gt; &lt;span class="hps atn"&gt;"&lt;/span&gt;&lt;span class=""&gt;Meskipun Google&lt;/span&gt; &lt;span class="hps"&gt;telah berakhir&lt;/span&gt; &lt;span class="hps"&gt;Pencarian&lt;/span&gt; &lt;span class="hps"&gt;Pembaruan&lt;/span&gt; &lt;span class="hps"&gt;yang&lt;/span&gt; &lt;span class="hps"&gt;berurusan dengan&lt;/span&gt; &lt;span class="hps"&gt;Twitter&lt;/span&gt;&lt;span&gt;,&lt;/span&gt; &lt;span class="hps"&gt;mesin pencari&lt;/span&gt; &lt;span class="hps"&gt;masih menggunakan&lt;/span&gt; &lt;span class="hps"&gt;situs&lt;/span&gt; &lt;span class="hps"&gt;media sosial&lt;/span&gt; &lt;span class="hps"&gt;untuk tujuan&lt;/span&gt; &lt;span class="hps"&gt;peringkat&lt;/span&gt;&lt;span&gt;,&lt;/span&gt;&lt;span&gt;" kata&lt;/span&gt; &lt;span class="hps"&gt;Jillian&lt;/span&gt; &lt;span class="hps"&gt;Stira&lt;/span&gt; &lt;span class="hps"&gt;di blog&lt;/span&gt; &lt;span class="hps"&gt;Pemasaran&lt;/span&gt; &lt;span class="hps"&gt;Scholes&lt;/span&gt;&lt;span&gt;.&lt;/span&gt;&lt;br /&gt;&lt;br /&gt; &lt;span class="hps"&gt;Dan Twitter&lt;/span&gt; &lt;span class="hps"&gt;tetap menjadi&lt;/span&gt; &lt;span class="hps"&gt;bagian penting dari&lt;/span&gt; &lt;span class="hps"&gt;strategi pencarian&lt;/span&gt; &lt;span class="hps"&gt;Anda&lt;/span&gt;&lt;span class=""&gt;, ia mencatat&lt;/span&gt;&lt;span&gt;:&lt;/span&gt; &lt;span class="hps atn"&gt;"&lt;/span&gt;&lt;span&gt;Twitter telah&lt;/span&gt; &lt;span class="hps"&gt;menarik&lt;/span&gt; &lt;span class="hps"&gt;di depan&lt;/span&gt; &lt;span class="hps"&gt;banyak&lt;/span&gt; &lt;span class="hps"&gt;platform&lt;/span&gt; &lt;span class="hps"&gt;media sosial&lt;/span&gt; &lt;span class="hps"&gt;lainnya&lt;/span&gt;&lt;span&gt;,&lt;/span&gt; &lt;span class="hps"&gt;menjadi&lt;/span&gt; &lt;span class="hps"&gt;sumber penting&lt;/span&gt; &lt;span class="hps"&gt;untuk optimasi&lt;/span&gt; &lt;span class="hps"&gt;mesin pencari (SEO&lt;/span&gt;&lt;span&gt;)&lt;/span&gt;&lt;span&gt;.&lt;/span&gt;&lt;span&gt;"&lt;/span&gt;&lt;br /&gt;&lt;br /&gt; &lt;span class="hps"&gt;Stira&lt;/span&gt; &lt;span class="hps"&gt;menawarkan nasihat&lt;/span&gt; &lt;span class="hps"&gt;khusus untuk membuat&lt;/span&gt; &lt;span class="hps"&gt;akun Twitter&lt;/span&gt; &lt;span class="hps"&gt;Anda&lt;/span&gt; &lt;span class="hps"&gt;mesin&lt;/span&gt; &lt;span class="hps"&gt;SEO&lt;/span&gt;&lt;span&gt;.&lt;/span&gt; &lt;span class="hps"&gt;Berikut adalah beberapa&lt;/span&gt; &lt;span class="hps"&gt;takeaways&lt;/span&gt; &lt;span class="hps"&gt;kunci:&lt;/span&gt;&lt;br /&gt;&lt;br /&gt;&lt;br /&gt; &lt;b&gt;&lt;span class="hps"&gt;Pilih&lt;/span&gt; &lt;span class="hps"&gt;nama&lt;/span&gt; &lt;span class="hps"&gt;Anda dengan mesin&lt;/span&gt; &lt;span class="hps"&gt;pencari dalam pikiran&lt;/span&gt;&lt;/b&gt;&lt;span&gt;.&lt;/span&gt; &lt;span class="hps"&gt;Saat membuat&lt;/span&gt; &lt;span class="hps"&gt;account&lt;/span&gt;&lt;span&gt;,&lt;/span&gt; &lt;span class="hps"&gt;Twitter akan&lt;/span&gt; &lt;span class="hps"&gt;meminta&lt;/span&gt; &lt;span class="hps"&gt;dua nama&lt;/span&gt;&lt;span&gt;.&lt;/span&gt; &lt;span class="hps"&gt;Yang pertama&lt;/span&gt; &lt;span class="hps"&gt;adalah nama&lt;/span&gt;&lt;span class="atn"&gt;-&lt;/span&gt;&lt;span class=""&gt;nyata&lt;/span&gt; &lt;span class="hps"&gt;Anda atau&lt;/span&gt; &lt;span class="hps atn"&gt;perusahaan Anda-&lt;/span&gt;&lt;span&gt;dan Anda&lt;/span&gt; &lt;span class="hps"&gt;diperbolehkan hingga&lt;/span&gt; &lt;span class="hps"&gt;20 karakter&lt;/span&gt;&lt;span&gt;, itu&lt;/span&gt; &lt;span class="hps"&gt;penting untuk&lt;/span&gt; &lt;span class="hps"&gt;memilih orang-orang&lt;/span&gt; &lt;span class="hps"&gt;besar akan&lt;/span&gt; &lt;span class="hps"&gt;pencarian&lt;/span&gt; &lt;span class="hps"&gt;nama&lt;/span&gt; &lt;span class="hps"&gt;mungkin.&lt;/span&gt; &lt;span class="hps"&gt;Yang kedua adalah&lt;/span&gt; &lt;span class="hps"&gt;username&lt;/span&gt; &lt;span class="hps"&gt;didahului oleh&lt;/span&gt; &lt;span class="hps"&gt;simbol&lt;/span&gt; &lt;span class="hps"&gt;@&lt;/span&gt;&lt;span&gt;.&lt;/span&gt; &lt;span class="hps"&gt;Anda terbatas pada&lt;/span&gt; &lt;span class="hps"&gt;15&lt;/span&gt; &lt;span class="hps"&gt;karakter di sini&lt;/span&gt;&lt;span&gt;,&lt;/span&gt; &lt;span class="hps"&gt;sehingga Anda mungkin&lt;/span&gt; &lt;span class="hps"&gt;harus melakukan beberapa&lt;/span&gt; &lt;span class="hps"&gt;pemangkasan&lt;/span&gt;&lt;span&gt;.&lt;/span&gt; &lt;span class="hps atn"&gt;"&lt;/span&gt;&lt;span&gt;Jika&lt;/span&gt; &lt;span class="hps"&gt;nama perusahaan&lt;/span&gt; &lt;span class="hps"&gt;Anda panjang&lt;/span&gt;&lt;span&gt;,&lt;/span&gt;&lt;span&gt;"&lt;/span&gt; &lt;span class="hps"&gt;menyarankan&lt;/span&gt; &lt;span class="hps"&gt;Sitra&lt;/span&gt;&lt;span&gt;,&lt;/span&gt; &lt;span class="hps atn"&gt;"&lt;/span&gt;&lt;span&gt;mempertimbangkan menggunakan&lt;/span&gt; &lt;span class="hps"&gt;singkatan&lt;/span&gt;&lt;span&gt;,&lt;/span&gt; &lt;span class="hps"&gt;menjaga&lt;/span&gt; &lt;span class="hps"&gt;seluruh&lt;/span&gt; &lt;span class="hps"&gt;kata yang paling&lt;/span&gt; &lt;span class="hps"&gt;relevan.&lt;/span&gt;&lt;span&gt;"&lt;/span&gt;&lt;br /&gt;&lt;br /&gt; &lt;b&gt;&lt;span class="hps"&gt;Buat konten&lt;/span&gt; &lt;span class="hps"&gt;yang relevan dan&lt;/span&gt; &lt;span class="hps"&gt;dicari&lt;/span&gt;&lt;/b&gt;&lt;span&gt;.&lt;/span&gt; &lt;span class="hps"&gt;Ketika&lt;/span&gt; &lt;span class="hps"&gt;tweeting&lt;/span&gt; &lt;span class="hps"&gt;dalam kapasitas&lt;/span&gt; &lt;span class="hps"&gt;profesional,&lt;/span&gt; &lt;span class="hps"&gt;pengamatan pribadi&lt;/span&gt; &lt;span class="hps"&gt;sesekali&lt;/span&gt; &lt;span class="hps"&gt;baik-baik saja&lt;/span&gt;&lt;span&gt;.&lt;/span&gt; &lt;span class="hps"&gt;Tapi&lt;/span&gt; &lt;span class="hps"&gt;aturan umum&lt;/span&gt; &lt;span class="hps"&gt;Anda harus&lt;/span&gt; &lt;span class="hps"&gt;tetap berpegang pada&lt;/span&gt; &lt;span class="hps"&gt;konten profesional&lt;/span&gt;&lt;span&gt;.&lt;/span&gt; &lt;span class="hps"&gt;Itu adalah&lt;/span&gt; &lt;span class="hps"&gt;konten&lt;/span&gt; &lt;span class="hps"&gt;pengikut Anda akan&lt;/span&gt; &lt;span class="hps"&gt;ingin berbagi&lt;/span&gt; &lt;span class="hps"&gt;dalam jaringan&lt;/span&gt; &lt;span class="hps"&gt;sosial.&lt;/span&gt; &lt;span class="hps atn"&gt;"&lt;/span&gt;&lt;span class="atn"&gt;[&lt;/span&gt;&lt;span&gt;Saya&lt;/span&gt;&lt;span&gt;]&lt;/span&gt; &lt;span class="hps"&gt;t adalah&lt;/span&gt; &lt;span class="hps"&gt;penting bahwa&lt;/span&gt; &lt;span class="hps"&gt;Anda menggunakan&lt;/span&gt; &lt;span class="hps"&gt;kata kunci yang relevan&lt;/span&gt; &lt;span class="hps"&gt;dan #&lt;/span&gt; &lt;span class="hps"&gt;hashtags&lt;/span&gt; &lt;span class="hps"&gt;untuk menjamin&lt;/span&gt; &lt;span class="hps"&gt;visibilitas&lt;/span&gt; &lt;span class="hps"&gt;yang lebih&lt;/span&gt; &lt;span class="hps"&gt;pada hasil&lt;/span&gt; &lt;span class="hps"&gt;pencarian untuk istilah&lt;/span&gt; &lt;span class="hps"&gt;penting bagi bisnis Anda&lt;/span&gt;&lt;span&gt;,&lt;/span&gt;&lt;span&gt;" saran&lt;/span&gt; &lt;span class="hps"&gt;dia&lt;/span&gt;&lt;span&gt;.&lt;/span&gt;&lt;br /&gt;&lt;br /&gt; &lt;b&gt;&lt;span class="hps"&gt;Sertakan&lt;/span&gt; &lt;span class="hps"&gt;link ke&lt;/span&gt; &lt;span class="hps"&gt;URL&lt;/span&gt; &lt;span class="hps"&gt;Anda&lt;/span&gt;&lt;/b&gt;&lt;span class=""&gt;.&lt;/span&gt; &lt;span class="hps"&gt;Link&lt;/span&gt; &lt;span class="hps"&gt;twitter&lt;/span&gt; &lt;span class="hps"&gt;tidak memberikan&lt;/span&gt; &lt;span class="hps"&gt;otoritas&lt;/span&gt; &lt;span class="hps"&gt;SEO&lt;/span&gt;&lt;span&gt;,&lt;/span&gt; &lt;span class="hps"&gt;Stira&lt;/span&gt; &lt;span class="hps"&gt;catatan&lt;/span&gt;&lt;span&gt;,&lt;/span&gt; &lt;span class="hps"&gt;tetapi mereka&lt;/span&gt; &lt;span class="hps"&gt;mengirim&lt;/span&gt; &lt;span class="hps"&gt;pengikut&lt;/span&gt; &lt;span class="hps"&gt;ke website Anda dan&lt;/span&gt; &lt;span class="hps"&gt;pencarian Google&lt;/span&gt; &lt;span class="hps"&gt;meminta&lt;/span&gt; &lt;span class="hps"&gt;untuk tindak lanjut&lt;/span&gt; &lt;span class="hps"&gt;penelitian.&lt;/span&gt; &lt;span class="hps"&gt;Itu adalah di mana&lt;/span&gt; &lt;span class="hps"&gt;kata kunci dalam&lt;/span&gt; &lt;span class="hps"&gt;menciak Anda&lt;/span&gt; &lt;span class="hps"&gt;juga ikut bermain&lt;/span&gt;&lt;span class="atn"&gt;-&lt;/span&gt;&lt;span class=""&gt;karena Anda&lt;/span&gt; &lt;span class="hps"&gt;telah memberi&lt;/span&gt; &lt;span class="hps"&gt;pengikut&lt;/span&gt; &lt;span class="hps"&gt;istilah&lt;/span&gt; &lt;span class="hps"&gt;yang&lt;/span&gt; &lt;span class="hps"&gt;mereka harus&lt;/span&gt; &lt;span class="hps"&gt;pencarian.&lt;/span&gt;&lt;br /&gt;&lt;br /&gt; &lt;span class="hps"&gt;Point&lt;/span&gt;&lt;span&gt;:&lt;/span&gt; &lt;span class="hps"&gt;Anda benar-benar&lt;/span&gt; &lt;span class="hps"&gt;dapat menciak&lt;/span&gt; &lt;span class="hps"&gt;untuk dolar&lt;/span&gt;&lt;span&gt;.&lt;/span&gt; &lt;span class="hps"&gt;Ketika dijalankan&lt;/span&gt; &lt;span class="hps"&gt;dengan benar&lt;/span&gt;&lt;span&gt;,&lt;/span&gt; &lt;span class="hps"&gt;Anda&lt;/span&gt; &lt;span class="hps"&gt;keberadaan&lt;/span&gt; &lt;span class="hps"&gt;Twitter dapat&lt;/span&gt; &lt;span class="hps"&gt;pak&lt;/span&gt; &lt;span class="hps"&gt;pukulan&lt;/span&gt; &lt;span class="hps"&gt;yang kuat&lt;/span&gt; &lt;span class="hps"&gt;SEO&lt;/span&gt;&lt;/span&gt;&lt;/div&gt;&lt;div class="blogger-post-footer"&gt;This is featured post by &lt;a href="http://duniasyukron.blogspot.com/" title="Muhammad Syukron"&gt;M.Syukron,S.E&lt;/a&gt;&lt;img width='1' height='1' src='https://blogger.googleusercontent.com/tracker/6709278747146913924-8748583773379490805?l=duniasyukron.blogspot.com' alt='' /&gt;&lt;/div&gt;&lt;div class="feedflare"&gt;
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&lt;/div&gt;&lt;img src="http://feeds.feedburner.com/~r/duniasyukron/~4/0TXiJwlw6zA" height="1" width="1"/&gt;</description><app:edited xmlns:app="http://www.w3.org/2007/app">2012-01-21T09:44:00.666+07:00</app:edited><thr:total xmlns:thr="http://purl.org/syndication/thread/1.0">0</thr:total><feedburner:origLink>http://duniasyukron.blogspot.com/2012/01/tiga-cara-untuk-meningkatkan-seo-dengan.html</feedburner:origLink></item><item><title>DuPont Financial Analysis Model</title><link>http://feedproxy.google.com/~r/duniasyukron/~3/0PjHYpvw6Do/dupont-financial-analysis-model.html</link><category>Koleksi Abstrak Skripsi</category><category>Tips</category><category>Sustainable growth rate</category><category>Kewirausahaan</category><category>Akuntansi</category><category>Konsepsi</category><author>noreply@blogger.com (Muhammad Syukron)</author><pubDate>Fri, 20 Jan 2012 18:36:00 PST</pubDate><guid isPermaLink="false">tag:blogger.com,1999:blog-6709278747146913924.post-2680071063672100189</guid><description>&lt;div dir="ltr" style="text-align: left;" trbidi="on"&gt;
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&lt;b&gt;&lt;i style="mso-bidi-font-style: normal;"&gt;&lt;u&gt;&lt;span style="color: #3e3e3e; font-size: 18pt;"&gt;DuPont Financial Analysis Model&lt;/span&gt;&lt;/u&gt;&lt;/i&gt;&lt;u&gt;&lt;span style="color: #3e3e3e; font-size: 14pt;"&gt;&lt;i&gt; : &lt;/i&gt;A Process For Knowing Where to Spend My Management Time Tomorrow Morning After Breakfast&lt;/span&gt;&lt;/u&gt;&lt;/b&gt;&lt;/div&gt;
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&lt;b&gt;&lt;span style="color: #3e3e3e; font-size: 14pt;"&gt;By&lt;/span&gt;&lt;/b&gt;&lt;/div&gt;
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&lt;b&gt;&lt;span style="color: #3e3e3e; font-size: 14pt;"&gt;Kevin Bernhardt, UW-Extension, UW-Platteville, and &lt;/span&gt;&lt;/b&gt;&lt;/div&gt;
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&lt;b&gt;&lt;span style="color: #3e3e3e; font-size: 14pt;"&gt;UW Center for Dairy Profitability&lt;/span&gt;&lt;/b&gt;&lt;/div&gt;
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&lt;br /&gt;&lt;/div&gt;
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&lt;span style="font-size: 12pt;"&gt;Our
computer technology today provides wonderful opportunities to collect,
manipulate, and process data including financial analysis data.&amp;nbsp; Sure, it gives a manager lots of numbers, but
what do they mean in terms of where to spend my creative management time
tomorrow morning after breakfast?&amp;nbsp; &lt;/span&gt;&lt;/div&gt;
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&lt;span style="font-size: 12pt;"&gt;There
is no lack of ratios to calculate from financial data, each of which is a
valuable piece of information to the manager.&amp;nbsp;
The Farm Financial Standard Council’s sweet 16 ratios (recently
expanded) have been a standard for years in helping farm managers evaluate
their financials.&amp;nbsp; However over several
years of teaching undergraduate students and Extension clientele I often found
it difficult for people to wrap their arms around what the ratios were
indicating and ultimately where to spend their valuable management time.&amp;nbsp; The challenge often led to indifference by
the undergraduate students and a lack of seeing any value to go further by
Extension clientele.&amp;nbsp; &lt;/span&gt;&lt;/div&gt;
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&lt;span style="font-size: 12pt; line-height: 115%;"&gt;The DuPont system for
financial analysis is a means to fairly quickly and easily assess where the business
strengths and weaknesses potentially lie and thus where management time may
optimally be spent.&amp;nbsp; It is not the only
nor the most thorough, but it is a fairly straight-forward and systematic means
to drill back into the financial numbers to determine the source or lack
thereof for financial performance.&lt;/span&gt;&lt;/div&gt;
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&lt;div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt;"&gt;A colleague, Gregg
Hadley (UW-River Falls), summed up well the DuPont system in a recent article
on E-Extension (&lt;/span&gt;&lt;span style="font-size: 12pt;"&gt;The DuPont Analysis: Making Benchmarking Easier and
More Meaningful, Updated June 10, 2009, &lt;/span&gt;&lt;a href="http://www.extension.org/pages/The_DuPont_Analysis:_Making_Benchmarking_Easier_and_More_Meaningful"&gt;&lt;span style="font-size: 12pt;"&gt;http://www.extension.org/pages/The_DuPont_Analysis:_Making_Benchmarking_Easier_and_More_Meaningful&lt;/span&gt;&lt;/a&gt;&lt;span style="font-size: 12pt;"&gt;):&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .5in; margin-top: 0in;"&gt;
&lt;i style="mso-bidi-font-style: normal;"&gt;&lt;span style="font-size: 12pt;"&gt;If we are lucky enough to have the
minimum number of financial documents needed to conduct a meaningful financial
analysis (both beginning and ending balance sheets, either an actual accrual or
accrual adjusted income statement, and a statement of cash flows), we are then
inundated with pages and pages of intimidating numbers to sort through. &lt;/span&gt;&lt;/i&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .5in; margin-top: 0in;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .5in; margin-top: 0in;"&gt;
&lt;i style="mso-bidi-font-style: normal;"&gt;&lt;span style="font-size: 12pt;"&gt;This gives many managers and advisers a
justification not to give their financial records anything more than a passing
glance. This is unfortunate. A good financial performance analysis should do
more than inform about how a farm performed in the past. More important, it
should provide the manager and adviser with insight regarding how to prioritize
activities that will enable the farm to improve its financial performance. &lt;/span&gt;&lt;/i&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; margin-left: .5in; margin-right: .5in; margin-top: 0in;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;The DuPont system has
disadvantages as does any financial analysis system.&amp;nbsp; However, its advantage beyond simplicity of
use is that it takes into account the major levers of firm profitability –
efficiency, asset use, and debt leverage. &lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Anatomy
of Profits&lt;/span&gt;&lt;/u&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Before describing the
DuPont system, consider the anatomy of profits.&amp;nbsp;
The accounting equation is:&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1; text-align: center;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Total Assets = Total Debt + Total Owner Equity&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;As the accounting
equation shows every penny of assets comes from one of two sources – that
financed by debt (borrowed capital) and that financed by equity (the owner’s
own money).&amp;nbsp; Assets can also be described
by those that are capital assets versus short-term inventory or market
assets.&amp;nbsp; Capital assets are longer-term
investments (land, machinery, breeding stock, etc.) that are not sold
themselves to make profits, but are put to work to produce marketable inventory
that can be sold for profits (feeder cattle, eggs, etc.).&amp;nbsp; Inventory also includes inputs such as feed,
seed, and fertilizer.&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Businesses earn
profits by mixing their labor and management with inputs and capital assets to
produce goods for sale.&amp;nbsp; The DuPont
system recognizes this recipe for profit-making and segregates it into three
distinct components or levers:&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoListParagraphCxSpFirst" style="background: white; mso-list: l1 level1 lfo2; mso-outline-level: 1; text-indent: -.25in;"&gt;
&lt;span style="font-family: &amp;quot;Calibri&amp;quot;,&amp;quot;sans-serif&amp;quot;;"&gt;1.&lt;span style="font: 7pt &amp;quot;Times New Roman&amp;quot;;"&gt;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp; &lt;/span&gt;&lt;/span&gt;&lt;span style="font-family: &amp;quot;Calibri&amp;quot;,&amp;quot;sans-serif&amp;quot;;"&gt;Earnings (or efficiency), &lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoListParagraphCxSpMiddle" style="background: white; mso-list: l1 level1 lfo2; mso-outline-level: 1; text-indent: -.25in;"&gt;
&lt;span style="font-family: &amp;quot;Calibri&amp;quot;,&amp;quot;sans-serif&amp;quot;;"&gt;2.&lt;span style="font: 7pt &amp;quot;Times New Roman&amp;quot;;"&gt;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp; &lt;/span&gt;&lt;/span&gt;&lt;span style="font-family: &amp;quot;Calibri&amp;quot;,&amp;quot;sans-serif&amp;quot;;"&gt;Turnings (effective use of
assets), and &lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoListParagraphCxSpLast" style="background: white; mso-list: l1 level1 lfo2; mso-outline-level: 1; text-indent: -.25in;"&gt;
&lt;span style="font-family: &amp;quot;Calibri&amp;quot;,&amp;quot;sans-serif&amp;quot;;"&gt;3.&lt;span style="font: 7pt &amp;quot;Times New Roman&amp;quot;;"&gt;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp; &lt;/span&gt;&lt;/span&gt;&lt;span style="font-family: &amp;quot;Calibri&amp;quot;,&amp;quot;sans-serif&amp;quot;;"&gt;Leverage (using debt to
multiply earnings and equity) &lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;In the DuPont system
one can drill back into these three levers to determine where profit
performance is coming from and potentially determine where management time
should be spent for improving profits.&amp;nbsp;
Specifically DuPont measures:&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoListParagraphCxSpFirst" style="background: white; mso-list: l0 level1 lfo1; mso-outline-level: 1; text-indent: -.25in;"&gt;
1.&lt;span style="font: 7pt &amp;quot;Times New Roman&amp;quot;;"&gt;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp; &lt;/span&gt;How efficiently inputs are being used to generate profits [Earnings]&lt;/div&gt;
&lt;div class="MsoListParagraphCxSpMiddle" style="background: white; mso-list: l0 level1 lfo1; mso-outline-level: 1; text-indent: -.25in;"&gt;
2.&lt;span style="font: 7pt &amp;quot;Times New Roman&amp;quot;;"&gt;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp; &lt;/span&gt;How well capital assets are being used to generate gross revenues
[Turnings]&lt;/div&gt;
&lt;div class="MsoListParagraphCxSpLast" style="background: white; mso-list: l0 level1 lfo1; mso-outline-level: 1; text-indent: -.25in;"&gt;
3.&lt;span style="font: 7pt &amp;quot;Times New Roman&amp;quot;;"&gt;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp;&amp;nbsp; &lt;/span&gt;How well the business is leveraging its debt capital [Leverage]&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Figure 1 shows a
graphic of the DuPont system.&amp;nbsp; It begins
on the far right side with Rate of Return on Equity (ROROE).&amp;nbsp; High ROROE is the prize in the DuPont system.&amp;nbsp; ROROE is calculated as:&lt;/span&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="text-align: center;"&gt;
&lt;u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Net Income from Operations – Unpaid Labor
&amp;amp; Management&lt;br /&gt;
&lt;/span&gt;&lt;/u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Total Owner Equity&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;The financial manager
can then drill backward to see where ROROE performance either is, or is not,
coming from.&amp;nbsp; &lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="separator" style="clear: both; text-align: center;"&gt;
&lt;a href="http://1.bp.blogspot.com/-JqG_2s9NwS4/TxYvqwblSzI/AAAAAAAAAPY/phN5mgioyDw/s1600/Figure+1%253Ddupont+system.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"&gt;&lt;img border="0" height="240" src="http://1.bp.blogspot.com/-JqG_2s9NwS4/TxYvqwblSzI/AAAAAAAAAPY/phN5mgioyDw/s320/Figure+1%253Ddupont+system.JPG" width="320" /&gt;&lt;/a&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: none repeat scroll 0% 0% white; margin-bottom: 0.0001pt;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Starting on the upper side ROROE, in-part,
comes from how well the business is earning profits from its assets as measured
by the Rate of Return on Assets (ROROA).&amp;nbsp;
ROROA is calculated as:&lt;/span&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="background: white; mso-outline-level: 1; text-align: center;"&gt;
&lt;u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;[Net
Income from Operations &amp;nbsp;&amp;nbsp;+&amp;nbsp; &amp;nbsp;Interest&amp;nbsp;
&amp;nbsp;–&amp;nbsp;
&amp;nbsp;Unpaid Labor and Management&lt;br /&gt;
&lt;/span&gt;&lt;/u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Total Assets&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;It makes sense that the higher the ROROA the
higher the ROROE.&amp;nbsp; In-turn, the ROROA comes
from two components or levers of profitability.&amp;nbsp;
&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;One is how efficient the manager is in
turning inputs into outputs, or in a financial sense, how efficient the manager
is in turning the gross revenue of dollars coming into the business into net
profits that are kept in the business after all expenses are paid.&amp;nbsp; This is the “Earnings” lever and is measured
by the Operating Profit Margin Ratio (OPMR).&amp;nbsp;
The calculation is:&lt;/span&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="background: white; mso-outline-level: 1; text-align: center;"&gt;
&lt;u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;[Net
Income from Operations &amp;nbsp;&amp;nbsp;+&amp;nbsp; &amp;nbsp;Interest&amp;nbsp;
&amp;nbsp;–&amp;nbsp;
&amp;nbsp;Unpaid Labor and Management&lt;br /&gt;
&lt;/span&gt;&lt;/u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Gross Revenue&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Interest is added back so that the measure
you get is one that measures efficiency of operations regardless of the debt
structure.&amp;nbsp;&amp;nbsp; Debt structure effects will
come into the system later.&amp;nbsp; In
situations where there is unpaid labor and management it is deducted to
recognize the value of the labor and management.&amp;nbsp; The more efficient you are in turning gross
sales into profits that you keep the higher your Rate of Return on Assets and
ultimately the higher your Rate of Return on Equity.&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;The second source of ROROE is how well you
are using the assets of the business.&amp;nbsp;
This lever is referred to as “Turnings” meaning how well you are turning
assets into production and sales of product.&amp;nbsp;
To use an extreme example, if you had a 300 acre farm (all tillable)
that you left sit idle then your performance of turning assets into production
and sales of product would go way down.&amp;nbsp;
The “turnings” lever is measured by the Asset Turnover Ratio (ATO).&amp;nbsp; The calculation is:&lt;/span&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="background: white; mso-outline-level: 1; text-align: center;"&gt;
&lt;u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Gross
Revenue&lt;/span&gt;&lt;/u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;&lt;br /&gt;
Total Assets&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;The better able you are to use the assets you
have to produce and sell product the higher the Rate of Return on Assets will
be and the higher the Rate of Return on Equity.&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;The last lever is “Leverage,” which is also
known as “Equity Multiplier”.&amp;nbsp; Before
going further with the explanation of leverage, it is worth backing up a step
and exploring the accounting equation again &lt;/span&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="background: white; mso-outline-level: 1; text-align: center;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;(Total Assets = Total
Debt + Total Equity).&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Given this equation, which is true for every
business, then any profitable return to the use of assets is a profit return to
the assets financed by debt and to those financed by equity.&amp;nbsp; Equity is fairly straight-forward, if you
invest $100 of your own money and earn $10 back then your equity has returned
10% (10/100).&amp;nbsp; For the return to debt it
is a bit more complicated because you have to pay someone for the use of the
debt – interest.&amp;nbsp; So, the question
becomes whether or not the debt you have is returning a profit larger than the
interest you have to pay for using that debt.&amp;nbsp;
If it is then the leftover profit after paying interest is an additional
return to your equity.&amp;nbsp; That is, if I’m
paying 8% interest and my profit return on the debt is 10%, then I not only can
pay my interest, but I have 2% leftover that I get to keep.&amp;nbsp; This 2% becomes and increase to my equity.&amp;nbsp; This is why the debt or leverage component of
DuPont is sometimes called an “Equity Multiplier.”&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;It may seem an odd statement to make for
some, but if you want to increase your ROROE then one way to do it is to
increase your debt!&amp;nbsp; The trick is that the
debt must be managed in a way that returns a profit greater than the interest
rate.&amp;nbsp; If it is not then the equity
multiplier still works, just in the wrong direction!&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Ultimately the leverage lever is measured by
the Debt to Asset ratio (D:A), which is calculated as:&lt;/span&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="background: white; mso-outline-level: 1; text-align: center;"&gt;
&lt;u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Total
Debt&lt;br /&gt;
&lt;/span&gt;&lt;/u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Total Assets&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;For ease of the math in the model, the
leverage lever can be expressed as:&lt;/span&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="background: white; mso-outline-level: 1; text-align: center;"&gt;
&lt;u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Total
Assets&lt;br /&gt;
&lt;/span&gt;&lt;/u&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Total Equity&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;The greater this ratio then the more the
proportion of debt is in the mix of assets.&amp;nbsp;
If the assets financed by debt are earning a return greater than the
interest rate, then the higher the ratio the greater the Rate of Return on
Equity.&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Figure 2 shows the same DuPont model with the
ratio measures.&lt;/span&gt;&lt;/div&gt;
&lt;div class="separator" style="clear: both; text-align: center;"&gt;
&lt;a href="http://2.bp.blogspot.com/-ghyUT99umPg/TxYvalD3hPI/AAAAAAAAAPQ/v_Ji_9UAKec/s1600/Figure+2%253Ddupont+ratios.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"&gt;&lt;img border="0" height="240" src="http://2.bp.blogspot.com/-ghyUT99umPg/TxYvalD3hPI/AAAAAAAAAPQ/v_Ji_9UAKec/s320/Figure+2%253Ddupont+ratios.JPG" width="320" /&gt;&lt;/a&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: none repeat scroll 0% 0% white;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;&lt;/span&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;&lt;/span&gt;&lt;span style="font-size: 12pt; line-height: 115%;"&gt;&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Note, the interest
rate adjustment in the ROROA box is the adjustment needed to return the cost of
interest before measuring the Rate of Return on Equity.&amp;nbsp; Recall that interest was taken out when
calculating the OPMR.&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;The DuPont system as
illustrated allows you to identify where profit performance is, or is not,
coming from in one or more of three areas.&amp;nbsp;
Once identified then the next step is to drill back into the numbers
that make up the ratio of concern.&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;For example, if the
OPMR is found to be lower than the manager would like it to be then look at the
numerator of the OPMR (net income from operations + interest – unpaid labor
&amp;amp; mgt) to determine what might be the problem, particularly expenses.&amp;nbsp; Compared to your more profitable peers what
are your labor, vet, repair, and other input costs?&amp;nbsp; &lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;If the performance
problem appears to be coming from a low ATO then the manager might drill back
into the business assets to see how well they are being used.&amp;nbsp; Are there dead assets in the business (ones
not being used to create product for sales), does the business have excess
machinery capacity, or are there assets that are under productive (poor weight
gain, breeding cycles too long, sickness, death loss, etc.).&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;If the debt structure
is low, that is debt is not leveraging equity as much as peer businesses, then
the manager might drill back and question how debt is being used.&amp;nbsp; Could additional debt be used to improve
facilities, machinery, etc. that ultimately pays for itself in higher
production and sales or does debt that is not productive need to be paid off
(or perhaps the assets sold).&amp;nbsp; &lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;As with all financial
analysis systems the model is only as good as the numbers that go into it, that
is, garbage in then garbage out.&amp;nbsp; Another
valuable piece of information to have to evaluate DuPont is benchmarks of
profitable peers.&amp;nbsp; There are general
ranges for each of the ratios, but each industry and your size within an
industry makes a difference as to what is “good” for the ratios.&amp;nbsp; Finally whether you rent or own the assets
you use in a business also makes a difference in the interpretation of the
ratios.&amp;nbsp; &lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;Appendix A provides a
brief example of using the DuPont model. &lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;span style="font-size: 12pt; line-height: 115%;"&gt;It is often said that
management is part science and part art.&amp;nbsp;
The DuPont system has both elements.&amp;nbsp;
The ratio calculations are science and just a manipulation of
numbers.&amp;nbsp; The art is interpreting the
ratios and drilling back into where the ratios indicate there could be
challenges and thus information of where to spend your creative management time
tomorrow morning after breakfast.&amp;nbsp; &lt;/span&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in; text-align: center;"&gt;
&lt;b&gt;&lt;u&gt;&lt;span style="font-size: 16pt;"&gt;Appendix A&lt;/span&gt;&lt;/u&gt;&lt;/b&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: center;"&gt;
&lt;span style="font-size: 12pt;"&gt;Brief
Example (Adapted from an example from Texas Tech University)&lt;/span&gt;&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt; http://www.aaec.ttu.edu/faculty/phijohns/AAEC%204316/Lecture/notes/DUPONT.htm&lt;/span&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1; text-align: center;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div align="center" class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1; text-align: center;"&gt;
&lt;u&gt;&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt; line-height: 115%;"&gt;Table
1. DuPont Analysis for Two Farms&lt;/span&gt;&lt;/u&gt;&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt; line-height: 115%;"&gt;&lt;/span&gt;&lt;/div&gt;
&lt;div align="center"&gt;
&lt;table border="0" cellpadding="0" class="MsoNormalTable" style="mso-cellspacing: 1.5pt; mso-yfti-tbllook: 160;"&gt;
 &lt;tbody&gt;
&lt;tr style="mso-yfti-firstrow: yes; mso-yfti-irow: 0;"&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"&gt;
&lt;u&gt;&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;Farmer
  A&lt;/span&gt;&lt;/u&gt;&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0in;"&gt;
&lt;u&gt;&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;Farmer
  B &lt;/span&gt;&lt;/u&gt;&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
 &lt;/tr&gt;
&lt;tr style="mso-yfti-irow: 1;"&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;1.
  Operating profit margin ratio (OPMR)&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.30&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.12&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
 &lt;/tr&gt;
&lt;tr style="mso-yfti-irow: 2;"&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;2.
  Asset turnover ratio (ATO)&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.20 &lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.36&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
 &lt;/tr&gt;
&lt;tr style="mso-yfti-irow: 3;"&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;3.
  ROROA (1*2) &lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.060 &lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.043&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
 &lt;/tr&gt;
&lt;tr style="mso-yfti-irow: 4;"&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;4.
  Interest expense to avg. farm assets&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.05&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.03&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
 &lt;/tr&gt;
&lt;tr style="mso-yfti-irow: 5;"&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;5.
  Equity multiplier&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;2.00&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;1.50&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
 &lt;/tr&gt;
&lt;tr style="mso-yfti-irow: 6; mso-yfti-lastrow: yes;"&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;6.
  ROROE (3-4) * 5&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.02&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
  &lt;td style="padding: .75pt .75pt .75pt .75pt;"&gt;&lt;div align="right" class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto; text-align: right;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;0.02&lt;/span&gt;&lt;/div&gt;
&lt;/td&gt;
 &lt;/tr&gt;
&lt;/tbody&gt;&lt;/table&gt;
&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;Farmer
A and Farmer B each have a 2 % ROROE. &amp;nbsp;However, the levers of the DuPont system indicate
that the sources of the weakness are different. &amp;nbsp;Farmer A has a stronger operating profit
margin ratio but lower asset turnover compared to Farmer B. Furthermore, Farmer
A has a higher leverage ratio (equity multiplier) than Farmer B.&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;The
weak ratios for each farm may be decomposed into components to determine the
potential sources of the weakness. To improve asset turnover Farmer A needs to
increase production efficiency or price levels or reduce current or noncurrent
assets. To improve profit margins, Farmer B needs to increase production
efficiency or price levels more than costs or reduce costs more than revenue.&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal; mso-margin-bottom-alt: auto; mso-margin-top-alt: auto;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;The
DuPont analysis is an excellent method to determine the strengths and
weaknesses of a farm. A low or declining ROROE is a signal that there may be a
weakness. However, using the DuPont analysis can better determine the source of
weakness. Asset management, expense control, production efficiency or marketing
could be potential sources of weakness within the farm. Expressing the
individual components rather than interpreting ROROE itself may identify these
weaknesses more readily.&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="line-height: normal;"&gt;
&lt;span style="font-family: &amp;quot;Times New Roman&amp;quot;,&amp;quot;serif&amp;quot;; font-size: 12pt;"&gt;&lt;a href="http://www.google.co.id/url?sa=t&amp;amp;rct=j&amp;amp;q=return+on+asset+is+filetype%3Adoc&amp;amp;source=web&amp;amp;cd=6&amp;amp;ved=0CEsQFjAF&amp;amp;url=http%3A%2F%2Fcdp.wisc.edu%2FPublications%2FDuPont%2520Model.doc&amp;amp;ei=zS0WT8CAF47KrAeQ5vw8&amp;amp;usg=AFQjCNGxjW0nk9BjNFd2_3u21Eo2ttKFsA&amp;amp;sig2=dujSqDgxp9LGug5NWOYIAg" target="_blank"&gt;Download this paper &lt;/a&gt;&lt;/span&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal" style="background: white; margin-bottom: .0001pt; margin-bottom: 0in; mso-outline-level: 1;"&gt;
&lt;br /&gt;&lt;/div&gt;
&lt;div class="MsoNormal"&gt;
&lt;br /&gt;&lt;/div&gt;
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