FINANCIAL PERFORMANCE OF A FARMING BUSINESS, FROM THE PERSPECTIVE OF DUPONT ANALYSIS

Abstract

The study aims to investigate the quantitative and qualitative increase factors of the profitability of an agricultural holding. The Du Pont system involves a factor analysis of the rate of return by decomposing the rates of return on the influencing factors. In the present research work, it was demonstrated that the difference between the financial return on equity (ROE) and return on total assets (ROA) reflects the effect of the financial leverage on the profitability of the company. The advantage of this method is the simultaneous analysis of more rates, offering an overview of the company's performances that allow the identification of potential issues that need to be solved. In the case study we present the indicators and the calculation of ROE by the Du Pont analysis on a time horizon of 3 years and observe the influences of indicators in the model on profitability.

Keywords

• farming business, financial analysis, profitability