DUPONT ANALYSIS OF COMPANIES IN THE SLOVAK REPUBLIC ENGINEERING INDUSTRY

Profitability ratios provides quick picture of companies' financial situation, but they do not have such explanatory power than overall financial analysis. The decomposition of the return on equity according to DuPont equation allows deeper analysis of the component ratios' impact, whose multiplication is return on equity. Exist more modification of return on equity breakdown. In this paper we used the variant, in which the return on equity is the multiplication of profit margin, assets turnover and equity multiplier. The impact of single component to the change of return on equity were examined by regression and correlation analysis. As a result, statistical analysis highlighted that the DuPont equation is useful tool for financial analysis. The most significant effect to return on equity has component asset turnover, profit margin and the least significant impact has equity multiplier.