Know the Return on Equipment Investment

Nov. 26, 2019

The following is from a story originally published on Construction Equipment

We work in a very capital-intensive business with razor-thin margins. Ever wondered how it works? Ever wondered whether it was more important to make a profit than to reduce the amount of capital required to accomplish the job?

As with most things, it is a balance. As with most things, success requires excellence in more than one dimension. It is not enough to be profitable; we must also manage capital employed and ensure that it is used as efficiently as possible.

The DuPont model was developed more than a century ago to show how profitability and asset turnover combine to calculate return on investment—one of the most fundamental measures of company performance. The model is as relevant today as it was then, and much can be achieved by understanding how it works and learning what equipment managers can do to improve their company’s performance.

Many variations of the DuPont model are found in practice. Some are more complex than others, and most are heavy in accounting and finance terminology. The diagram at top simplifies the model and illustrates the principles involved using as much construction language as possible. Let’s go through it step by step.

For the full story, please visit: https://www.constructionequipment.com/know-return-equipment-investment

Sponsored Recommendations

The Science Behind Sustainable Concrete Sealing Solutions

Extend the lifespan and durability of any concrete. PoreShield is a USDA BioPreferred product and is approved for residential, commercial, and industrial use. It works great above...

Proven Concrete Protection That’s Safe & Sustainable

Real-life DOT field tests and university researchers have found that PoreShieldTM lasts for 10+ years and extends the life of concrete.

Revolutionizing Concrete Protection - A Sustainable Solution for Lasting Durability

The concrete at the Indiana State Fairgrounds & Event Center is subject to several potential sources of damage including livestock biowaste, food/beverage waste, and freeze/thaw...

The Future of Concrete Preservation

PoreShield is a cost-effective, nontoxic alternative to traditional concrete sealers. It works differently, absorbing deep into the concrete pores to block damage from salt ions...