An Empirical Evaluation Using DuPont Analysis In Select Non Banking Finance Companies

ABSTRACT

Dupont analysis is a financial tool developed by Dupont Corporation during 1920s.Dupont analysis normally describes how much money is generated for shareholders. Normally the profit can be determined with the help of ROE by dividing the net profit by shareholder equity. It helps to identify the strength and deficiency of business enterprise in order to predict the earning ability of business enterprise.There are three components of this model. They are Net Profit Margin, Assets Turnover Ratio, and Equity Multiplier. The study focuses on listed companies of the BSE & NSE. The sample of the study is tenlisted companies. And Non Probability sampling method is used for the study. This study applies three major elements such as Net Profit Margin, Assets Turnover Ratio, and Equity Multiplier and analysed the Return on Equity & Return on Assets.The study of DuPont analysis is not only forecast ROE but also to identify factors which are affecting ROE. This model was developed to analyze ROE and the effects of this ratio on different businesses performance. The findings of the study shows that ROE has been reducing is fall in the sales volume year by year as well as the management of the company are not able utilize the company assets properly and on the other hand company does not have worthful assets which is equal to shareholders fund/Equity. So DuPont analysis is essential to determine the intrinsic value earned by shareholders fund as well as to determine the causes affecting in reduction of ROE.

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