Profitability indicators play an important role in managerial decision-making, reflecting the extent to which the various components of an entity’s financial position and performance can generate net profit. In this context, the return on equity (ROE) is particularly relevant, as it measures the degree to which shareholders’ equity generates net returns. To highlight the factors that directly influence ROE, the DuPont model proposes the decomposition of the indicator into three main components: net profit margin, asset turnover, and the equity multiplier (financial leverage). This approach facilitates the identification of the factor that has the greatest impact on ROE, both at the individual entity level and, at a broader level, across different sectors of activity. The present article proposes an analysis of financial profitability based on these three factors, broken down by industry sector and using samples of three companies per sector, over a ten-year period (2015–2024). Accordingly, the study seeks to identify the factor exerting the greatest impact at both the company level and the industry level.
Bogdan Cosmin Gomoi (Thu,) studied this question.
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