Abstract
The measurement of financial performance is primarily based on return on equity (ROE) ratio. The DuPont model analyzes the sources of financial performance (ROE) of a firm. The luxury industry tends to drive high profitability in the market vis-a-vis the market counterparts. Is this an enough evidence to believe that the ROE is majorly contributed by profitability of the luxury firms ? The study intended to test the impact of firms’ profitability, asset efficiency, and financial leverage on ROE in the luxury industry (LI) and the non-luxury industry (NLI). The paper conducted the DuPont analysis, and a comparison between luxury industry and non-luxury industry was drawn. The empirical findings claimed that the maximum beta-coefficient was contributed by efficiency of a firm, which was measured by ATR for dependent variable ROE. On establishing a comparison, the results were found to be similar even in the luxury industry.
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