Financial performance of the SMEs sector in Kosovo: An empirical analysis using the DuPont model

Abstract

The aim of the study is to illustrate the advantages of the DuPont model, namely the division of complex indicators into the factors of which they are composed. This allows us to determine the main causes and the relationship of changes in the complex performance indicators of small and medium enterprises operating in Kosovo. This research takes 40 small and medium-sized enterprises operating in Kosovo during the period 2016‒2018 and uses the DuPont model of financial analysis based on capital analysis of the return model to analyse and measure their financial performance. This research will be realised with the statistical software SPSS, using ROE (return on equity) as the dependent variable and AU (Assets utilisation), EM (equity multiplier) and PM (profit margin) as the independent variables. The fact that companies around the world operate across volatile markets as well as with extremely fierce competition adds to the need for constant monitoring of the financial condition of the enterprise itself as well as its competitors. For various reasons, the state and other actors in the market also need knowledge about this issue. This research is a summary of information from multiple sources in order to provide a description of the reality faced by enterprises when compiling financial reports. By reading this paper, the reader will be able to expand their knowledge about the process of compiling and reporting financial results.