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Comparison Of Profitability For Pharmaceutical Romanian Listed Companies Using Dupont Identity

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  • Ioana Cristina COLBU

    (“Stefan cel Mare” University of Suceava, Romania, Faculty of Economics and Public Administration)

Abstract

The financial statements of a company are analysed trough a series of indicators. However, the calculation and interpretation of simple indicators have disadvantages such as un-exhaustive characterisation of a single activity inside the company. DuPont Identity determines the return on equity with the help of 3 formulas. This is extremely useful if more detailed analysis of the company’s performance is required, such as determining the strengths and the weaknesses so that the management should be able to improve exactly the part that needs improvement. The purpose of this article is to compare the annual financial individual statements over a period of 4 years for 5 pharmaceutical listed companies through the DuPont method and to verify the hypothesis that a high rate of profitability on employed capital translated into higher tradable value of the company’s shares. The experimental part of the paper has shown that between the return on equity and the average price of the company’s share are no direct connections.

Suggested Citation

  • Ioana Cristina COLBU, 2013. "Comparison Of Profitability For Pharmaceutical Romanian Listed Companies Using Dupont Identity," The USV Annals of Economics and Public Administration, Stefan cel Mare University of Suceava, Romania, Faculty of Economics and Public Administration, vol. 13(1(17)), pages 78-83, June.
    • Handle: RePEc:scm:usvaep:v:13:y:2013:i:1(17):p:78-83
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    File URL: http://www.seap.usv.ro/annals/arhiva/USVAEPA_VOL.13,ISSUE_1(17),2013_fulltext.pdf
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    Cited by:

    1. Baciu (Boanta) Rodica & Brezeanu Petre & Adrian Simon, 2020. "The Influence of Bank Credit on Financial Structure and Financial Return for the Romanian Companies Active in Car Parts Distribution," Accounting and Finance Research, Sciedu Press, vol. 9(2), pages 1-73, May.

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