Company H Based On The Improved DuPont Analysis System Financial Performance Evaluation Study

As the economy has advanced rapidly,the medical system has been steadily enhanced,and the elderly population is aging more and more,China has seen a surge in its investment in healthcare,and the pharmaceutical sector has grown exponentially.Simultaneously,the nation has been undergoing continual reform and the introduction of fresh national regulations.The pharmaceutical industry’s market climate is undergoing considerable alterations,and the rivalry between businesses is intensifying.Although H,a pharmaceutical firm,has advanced quickly in recent years,its profits fluctuate significantly and its financial standing is still unsteady.Amidst the intense rivalry in the pharmaceutical sector,it is essential to conduct a financial examination of company H to identify any issues that may be present in its growth,thus augmenting the company’s competitiveness.As a method for evaluating financial performance,the Du Pont analysis system has extensive application in a variety of industries due to its own benefits.It uses net equity margin as the primary ratio,which can then be expressed as the product of net sales margin,total asset turnover ratio,and equity multiplier through a series of step-by-step decompositions in order to evaluate the financial status and operating results of the target company.However,as modern businesses face increased competition from domestic and foreign rivals and diversify their investment and financing activities,the traditional Du Pont analysis system’s deficiencies have progressively become apparent.To effectively and objectively evaluate the financial performance of businesses,it is of utmost significance to construct an enhanced Du Pont analysis system utilizing management financial statements.First,the research context and significance of this paper are discussed.Then,the problems of the traditional Du Pont analysis system and some corresponding improvement studies and financial performance evaluation studies at home and abroad are reviewed and summarized.Finally,the fundamental concepts and theoretical foundations of financial performance evaluation and the Du Pont analysis system are elucidated.Second,the paper revises and improves the conventional Du Pont analysis system for evaluating financial performance in order to address its flaws in the context of Company H.Using the management balance sheet,management income statement,and traditional cash flow statement data in its entirety,this paper develops an enhanced Du Pont analysis system with a sustainable growth rate at its foundation.Using Company H as a case study,the traditional and enhanced Du Pont analysis systems are applied to evaluate Company H’s financial performance from 2017 to 2021 by combining factor analysis in a comprehensive manner.By comparing the methodologies and results of evaluating Company H’s financial performance before and after the improvement of the Du Pont analysis system,it is shown that the improved Du Pont analysis system can evaluate Company H’s financial performance more comprehensively and accurately.