DuPont Decomposition for Fertilizer Companies

The case focuses on analysing the top two Indian fertilizer companies’ performance in terms of revenue and income for 2019–2020, Coromandel International Limited (CIL) and Gujarat State Fertilizers & Chemicals Limited (GSFC). Based on performance appraisal, students are expected to select the better company for investment to get a better return. To make such a decision, students must analyse DuPont decomposition, modified (also known as additive or alternate) DuPont approach and Altman Z-score. The case aims to teach analysis of companies’ financial statements using financial ratios. It explains how the DuPont method and Altman Z-score can recognize the factors that affect a company’s performance through assessment of profitability, efficiency and leverage. The case is appropriate for financial accounting courses, audit and assurance, financial modelling, accounting practice and regulations. After studying the issues, students should analyse the business models of CIL and GSFC by reviewing their history since incorporation, product and service offerings, revenue, margins, assets, borrowings and market capitalization (Bodie & Merton, 2000, Finance, Prentice-Hall). We are particularly interested in assessing the current financial position, market position and strategies of the companies and their peer group and evaluating the role of gatekeepers, such as business analysts, audit committees, external auditors, institutional investors and regulators, in enhancing the quality of financial reporting.