IDEAS home Printed from https://ideas.repec.org/a/ids/ijbglo/v35y2023i1-2p173-202.html
   My bibliography  Save this article

A study of DuPont model: its application and identification of key determinants for public limited companies

Author

Listed:
  • Smita Jape
  • Meenakshi Malhotra

Abstract

DuPont model is a very significant tool to analyse the financial evaluation of the organisation. It takes into account the three important parameters turnover, liquidity and profitability of the organisation. The foremost objective of this paper is to explore and validate the different components of the DuPont model for public limited companies for the time period 2009-2016 for 13,189 companies. The data has been analysed using ratio analysis, indexation, common size statement, correlation analysis and multiple regression. The results of the study show that return on capital employed (ROCE) is the most important parameter of return on equity (ROE) which is significantly influenced by margin of safety, profit volume ratio (P/V ratio) and asset turnover ratio. Out of these three, the most significant factor is margin of safety (MOS). ROE is more sensitive to profitability as compared to turnover and leverage. The analysis and validation of DuPont is useful for financing, operating and investing decisions for any organisation.

Suggested Citation

  • Smita Jape & Meenakshi Malhotra, 2023. "A study of DuPont model: its application and identification of key determinants for public limited companies," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 35(1/2), pages 173-202.
    • Handle: RePEc:ids:ijbglo:v:35:y:2023:i:1/2:p:173-202
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=134396
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijbglo:v:35:y:2023:i:1/2:p:173-202. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=245 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.