A DuPont model approach to financial management: a case study of veterinary practices
Date
2017
Authors
Dodge, Lynn E., author
Koontz, Stephen R., advisor
Hadrich, Joleen C., committee member
Frasier, W. Marshall, committee member
Garry, Franklyn B., committee member
Journal Title
Journal ISSN
Volume Title
Abstract
As the veterinary industry continues to face personal debt and practice management challenges, financial analysis of veterinary practices is becoming increasingly important. Historically, veterinary practices have been managed for profitability, which when measured alone ignores the role investment and borrowing play in earning financial returns. A DuPont Model is employed to measure profitability, asset turnover, and leverage separately and then collectively through the evaluation of return on equity (ROE). Veterinary practices are divided into performance groups based on ROE and the management behavior of each performance group is evaluated and characterized. Returns for higher performing practices flow back into the business to increase productive capacity while returns for lower performing practices flow out of the business through debt repayment and owner compensation. Leverage is important where highest performers used debt to increase productive capacity and thus increase returns and the lowest performers used debt as a tool to keep their poor performing businesses in practice. This work provides a model and reference point for veterinary practice managers to measure their own financial performance.
Description
Rights Access
Subject
management
DuPont model
veterinary