THE APPLICATION OF FACTOR EXPANSION IN FINANCIAL ANALYSIS: CASE STUDY OF DU PONT ANALYSIS FORMULA ANALYSIS

Abstract

Accounting is a dual attribute discipline with both natural attributes (natural link to mathematics) and social attributes (accounting account setting, conceptual control, summarisation). Based on the natural properties of accounting as a starting point, this paper builds on the DuPont formula and DuPont analysis to produce a mathematical mechanism and its logical framing equation, and to factor extensions, adding and subtracting factor variables to make the DuPont equation and the DuPont analysis method more complete, while achieving the goal of refined financial analysis. In the case application, the authors used the logarithmic ratio method of factor analysis indices (the scientifically correct apportionment of the interaction between factors) to verify the comparison of the ROE differences between the DuPont formula and the extended DuPont formula as the basic analytical equation, making the ROE DuPont refinement and quantitative analysis more accurate.