Research On The Application Of Improved DuPont Analysis System In Poly Real Estate

In 1919,Pierre Du Pont and Donaldson Brown developed Du Pont financial analysis system.With an easy and intuitive model,Du Pont Analysis can evaluate a company's profitability and its return on equity,therefore has been commonly used in the corporate financial analysis.With the society's continuous development,increasing complexity of corporate operation,many companies make profit not only with business operation,but also financial investment activities.Modern companies commonly use corporate value maximization as the goal,and many emphasize sustainable development.As to the stockholder and investors,they pay more attention to the company's ability to repay debt and pay dividend.Poly Development and Holdings Group Co.Ltd is a leading company in China real estate industry,and grows at a high speed.With its growing revenue and profitability,the financial data users pay a lot attention on if Poly has sufficient cash flow under its high equity debt ratio,if it can sustain its development capability,and if it properly distinguishes operation activities and financing activities.In the recent years,Chinese government frequently announced policies to adjust and control the real estate market,and the competition among real estate companies is increasingly fierce.As a result,it is extremely important to develop a system that can be used to accurately analyze the financial status and maintain a good healthy development.Obviously,The traditional Du Pont analysis can no longer satisfy these demands of corporate financial development.Firstly,to solve these problems,this thesis looked back and summarized the global studies pertained to this topic and proposed an improved Du Pont analysis system.In this improved system,it included the analysis of sustainable growth capability,distinguished the operation activities and financial activities,added in the cash flow indicator and dividend disbursement analysis,and accordingly changed the financial indicators to be analyzed.The improved Du Pont analysis system is based on the sustainable growth rate,decamped each level from top to bottom,and finally is represented as operation net profit margin after tax,net operating asset turnover,and operation variance multiplied by financial leverage.Secondly,this thesis used both traditional and improved Du Pont analysis system,analyzed Poly's financial status during the period of 2012~2017.Based on the evaluationresults,it compared sustainable growth capability,dividend disbursement ability,profitability,debt repayment ability,and operation capacity.The comparison of these five aspects consistently showed that the improved Du Pont system is more comprehensive,more specific,and more practical.Thirdly,based on the Poly's financial analysis result combined with its current development status,the thesis made suggestions to further improve its financial status,including expanding sales,reducing financial leverage,promoting capital return,increasing operational cash flow,and enhancing the profitability.At the end,the thesis summarized the practicality and the advantages of the improved Du Pont analysis system,pointed out its deficiencies in the accuracy of distinguishing operating activities and financial activities and lack of comprehensiveness in the influential factor analysis of the sustainable development,and hope that the improved Du Pont analysis system can be further improved in the future studies to make it even more practical.