Year: 2026
Type: article
Abstract: This study evaluates the financial performance of selected Indian companies using the DuPont Analysis framework, with particular emphasis on Return on Equity (ROE), Net Profit Margin, Asset Turnover and Equity Multiplier. The analysis examines how profitability, asset utilisation, working capital efficiency, capital allocation and financial leverage influence overall corporate performance. By comparing companies across different sectors, the study highlights the importance of sector-specific interpretation of financial ratios and the need to distinguish recurring operating performance from exceptional income. The findings suggest that a high ROE does not necessarily indicate superior or sustainable financial performance, as returns may be influenced by differences in profitability, asset efficiency and financial leverage. The study therefore emphasises sustainable growth, earnings quality, cash-flow strength, capital efficiency and risk management when evaluating corporate performance. DuPont Analysis provides a useful framework for investors, analysts and managers to identify the underlying drivers of ROE and assess whether shareholder returns are supported by efficient operations and prudent financing decisions. The study also highlights the potential value of multi-year analysis, sector comparison and panel regression for understanding changes in financial performance and improving investment analysis.
Authors: K Hemanth, Pavan Kumar S S
Institution: Ballari Institute of Technology & Management
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W7203687671
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