Financial performance analysis of eurozone listed companies using dupont model
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abstract
The main objective of this paper is the analysis of factors that can influence the financial
performance (measured by “return on equity”) of the Eurozone listed companies. For this
purpose, we use the DuPont model to provide useful information to identify the main factors
that affect profitability. The data was collected from financial statements of the Eurozone listed
companies during the year 2018 (ORBIS database), and the final sample included 750
companies distributed across the 19 Eurozone countries. Using the Ordinary Least Squares
(OLS) method, we studied the effects of four factors (tax burden, interest burden, EBIT margin,
and assets turnover) in return on equity. The overall results suggest that all factors significantly
have an influence in return on equity and, consequently, the financial performance of
companies listed in the stock markets of Eurozone countries. The efficient use of total assets,
measured by assets turnover, seems to be the most powerful factor with an impact of 0.94% in
ROE, due to a variation of 1%. However, all the other factors also show a considerable
influence on financial performance.
