Implementation of Du Pont Model in Non-Financial Corporations
In this paper, the practical application of the dynamic decomposition of the return on equity is used on the basis of the ratio indicators. These indicators are determined according to the absolute items taken from the Register of Financial Statements of the Slovak Republic and are obtained for...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
NGO “Economic Laboratory for Transition Research” (ELIT)
2018-06-01
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| Series: | Montenegrin Journal of Economics |
| Subjects: | |
| Online Access: | http://www.mnje.com/sites/mnje.com/files/131-141_-_jencova__litavcova_and_vasanicova.pdf |
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| Summary: | In this paper, the practical application of the dynamic decomposition
of the return on equity is used on the basis of the ratio indicators.
These indicators are determined according to the absolute
items taken from the Register of Financial Statements of the Slovak
Republic and are obtained for individual non-financial corporations
according to SK NACE 26 and SK NACE 27 for the period 2013-
2016. Du Pont decomposition of the return on equity allowed quantifying
the impact of the financial indicators such as return on sales,
total assets turnover ratio, financial leverage, and interest and tax
profit reduction, which were linked by a multiplicative product interaction.
Quantification of the factors impact was applied to a sample
of 138 non-financial corporations using the equations valid for the
application of the functional method. By applying the exploration
data analysis, the impact of the factors is plotted graphically. The
box plot shows that the obtained values are very varied and it follows
that no clear conclusion can be deduced. There is potential for
further exploration of the dynamic model. |
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| ISSN: | 1800-5845 1800-6698 |