Research On The Improved Dupont Financial Analysis System Applied In Real Estate Enterprises

As the further macro-control of our country, the government and the masses havepaid much more attention to the real estate enterprises in which the competition hasbecome increasingly fierce. And there is also a heated discussion on the financialcondition and future trends of the real estate enterprises. It’s necessary to analyzeenterprises’ financial statement to know the present financial situation of the real estateenterprises. In order to convert the most primitive financial data into useful financialinformation to help users evaluate the financial condition of the enterprise, the corporatefinancial statements must be analyzed.The core rate of the DuPont financial analysis system is the Return on Equity. Andthen it is broken down into three basic financial indicators, including net profit margin,total assets turnover and equity multiplier. The decomposition of the DuPont system canreflect the principles of the corporate management, and also can reflect the company’sfinancial strategy. However, economic environment is increasingly complex. Theshortcomings of traditional DuPont financial analysis system are gradually revealed. Ithas failed to meet the need of the financial analysis of contemporary corporate.Firstly, this paper reviews the literature review on the DuPont financial analysissystem. And then it introduces the development of the financial analysis method anddisadvantages of the traditional DuPont financial analysis system. Secondly, this articleintroduces the sustainable growth rate to improve the traditional DuPont financialanalysis system based on the future development of the real estate industry. And then,combined with the capital-intensive feature of the real estate industry, the paper takescash flow indicators into consideration, so as to analyze the cash condition of the realestate industry. Thirdly, combined with the interlocking substitution and trend analysismethod, this paper has analyzed the financial condition of Vanke comprehensivelymaking use of the improved DuPont financial analysis system. Meanwhile, thesustainable growth rate and the actual rate between the year of2003and2012of Vankehave been comparatively analyzed, which makes use of the Wilcoxon signed rank test.According to the result, this paper has concluded that Vanke didn’t achieve sustainabledevelopment in the past ten years. Fourthly, the paper has proposed some suggestions onimproving the quality of earnings and asset-liability ratio and also promotingsustainable development and so on. Finally, this paper has proposed that when applied the DuPont financial analysis system in the real estate enterprises, the cash flowindicator and sustainable growth rate should be considered.