DuPont analysis and EMIR: Difference between pages

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''Financial analysis - ratio analysis.''
The European Market Infrastructure Regulation<ref> http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:201:0001:0059:EN:PDF</ref> (EMIR) became law within the European Union in 2012, although certain of its requirements came into force only after a period of delay.


DuPont analysis is a form of financial ratio analysis.
The objective of EMIR is to reduce the risks posed to financial systems from the vast web of [[Over the counter]] (OTC) derivative transactions and the large contingent credit exposures that may arise as a consequence.


It is based on the insight that key financial ratios can be broken down, in turn, into two or more component ratios.


Examining the component ratios, in turn, may yield further insights and opportunities for improvement.
The Regulation achieves this object by three significant requirements for:


#Central clearing and margining of standardised OTC derivatives (with certain exemptions for Non-Financial Counterparties)
#Reporting of all derivative transactions to a trade repository
#Risk mitigation measures for all non cleared derivatives including collateral exchange and  confirmation and reconciliation procedures
== See also ==
* [[AIFMD]]
* [[Buy-side firm]]
* [[CCP]]
* [[CFTC]]
* [[CSD]]
* [[Dodd-Frank]]
* [[Dual reporting]]
* [[ESMA]]
* [[European Union]]
* [[FATCA]]
* [[FC]]
* [[Infrastructure]]
* [[Know-your-customer]]
* [[Legal entity identifier]]
* [[MCT]]
* [[MiFID]]
* [[MiFID II]]
* [[NFC]]
* [[RTS]]
* [[SEC]]
* [[SSR]]
* [[Trade repository]]
* [[UTI]]
* [[WGMR]]


For example, Return on Equity can be broken down into three components:


*Net profit margin;
*Asset turnover; and
*Leverage.


===Other links===
[http://www.treasurers.org/otc ACT briefing note: European regulation of OTC derivatives: Implications for non-financial companies, April 2013 ]


Measuring and targeting different managers and corporate functions appropriately, can ensure that everyone is pulling in the same direction.
[http://www.treasurers.org/node/9344 EMIR edges near, The Treasurer, September 2013]


This consistency is sometimes known as ''goal congruence''.
[http://www.treasurers.org/node/9406 Frequently Asked Questions for non financial counterparties - updated December 2013]


[http://www.treasurers.org/node/9873 Companies hope for relief from EMIR, Sally Percy, The Treasurer, February 2014]


The ratios are sometimes set out in a pyramid-shaped diagram, with the analysis being known as the ''DuPont pyramid of ratios''.
[https://www.treasurers.org/ACTmedia/EMIR_Consulation_Response_August_2015.pdf ACT's EMIR Consultation Response, August 2015]




== See also ==
===References===
* [[Asset turnover ]]
<references />
* [[Financial analysis]]
* [[Goal congruence]]
* [[Leverage]]
* [[Net profit margin]]
* [[Price to earnings ratio]]
* [[Profitability]]
* [[Profitability ratio]]
* [[Ratio analysis]]
* [[Return on equity]]


[[Category:Financial_management]]
[[Category:Corporate_financial_management]]
[[Category:Knowledge_and_information_management]]
[[Category:Risk_frameworks]]
[[Category:Planning_and_projects]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]

Revision as of 08:23, 4 April 2017

The European Market Infrastructure Regulation[1] (EMIR) became law within the European Union in 2012, although certain of its requirements came into force only after a period of delay.

The objective of EMIR is to reduce the risks posed to financial systems from the vast web of Over the counter (OTC) derivative transactions and the large contingent credit exposures that may arise as a consequence.


The Regulation achieves this object by three significant requirements for:

  1. Central clearing and margining of standardised OTC derivatives (with certain exemptions for Non-Financial Counterparties)
  2. Reporting of all derivative transactions to a trade repository
  3. Risk mitigation measures for all non cleared derivatives including collateral exchange and confirmation and reconciliation procedures


See also


Other links

ACT briefing note: European regulation of OTC derivatives: Implications for non-financial companies, April 2013

EMIR edges near, The Treasurer, September 2013

Frequently Asked Questions for non financial counterparties - updated December 2013

Companies hope for relief from EMIR, Sally Percy, The Treasurer, February 2014

ACT's EMIR Consultation Response, August 2015


References

  1. ↑ http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:201:0001:0059:EN:PDF
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