What are the improvements in the application of the residual income valuation model?

Improvements in the application of the residual income valuation model are as follows:

1. Using the improved DuPont financial analysis system to predict the residual income, we can use both the equity residual income model and the operating residual income model when evaluating the value of the company under the current accounting standards, but due to the caliber of calculation of the traditional DuPont financial analysis system's financial indicators is not the same as the caliber of calculation of the residual income of the consolidated income, so we have to improve it to measure the residual income. However, since the calculation caliber of the financial indicators of the traditional DuPont financial analysis system is not consistent with that of the comprehensive income in the residual income, we have to improve it and adopt the improved DuPont financial analysis system to decompose and measure the residual income.

2. The residual income model is deformed on the basis of the price-to-book ratio. The residual income model is essentially a kind of income assessment method, and its going concern assumption condition directly leads to the difficulty in predicting the residual income in the subsequent period.