Stock Analysis on Net
Stock Analysis on Net

Cisco Systems Inc. (NASDAQ:CSCO)

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin

Microsoft Excel

Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.

Two-Component Disaggregation of ROE

Cisco Systems Inc., decomposition of ROE

Microsoft Excel
ROE = ROA × Financial Leverage
Jul 29, 2023 28.44% = 12.38% × 2.30
Jul 30, 2022 29.70% = 12.57% × 2.36
Jul 31, 2021 25.66% = 10.86% × 2.36
Jul 25, 2020 29.57% = 11.82% × 2.50
Jul 27, 2019 34.62% = 11.88% × 2.91
Jul 28, 2018 0.25% = 0.10% × 2.52

Based on: 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27), 10-K (reporting date: 2018-07-28).

The primary reason for the decrease in return on equity ratio (ROE) over 2023 year is the decrease in financial leverage ratio.

Three-Component Disaggregation of ROE

Cisco Systems Inc., decomposition of ROE

Microsoft Excel
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Jul 29, 2023 28.44% = 22.13% × 0.56 × 2.30
Jul 30, 2022 29.70% = 22.91% × 0.55 × 2.36
Jul 31, 2021 25.66% = 21.26% × 0.51 × 2.36
Jul 25, 2020 29.57% = 22.75% × 0.52 × 2.50
Jul 27, 2019 34.62% = 22.39% × 0.53 × 2.91
Jul 28, 2018 0.25% = 0.22% × 0.45 × 2.52

Based on: 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27), 10-K (reporting date: 2018-07-28).

The primary reason for the decrease in return on equity ratio (ROE) over 2023 year is the decrease in profitability measured by net profit margin ratio.

Five-Component Disaggregation of ROE

Cisco Systems Inc., decomposition of ROE

Microsoft Excel
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Jul 29, 2023 28.44% = 0.82 × 0.97 × 27.62% × 0.56 × 2.30
Jul 30, 2022 29.70% = 0.82 × 0.98 × 28.78% × 0.55 × 2.36
Jul 31, 2021 25.66% = 0.80 × 0.97 × 27.49% × 0.51 × 2.36
Jul 25, 2020 29.57% = 0.80 × 0.96 × 29.52% × 0.52 × 2.50
Jul 27, 2019 34.62% = 0.80 × 0.94 × 29.73% × 0.53 × 2.91
Jul 28, 2018 0.25% = 0.01 × 0.93 × 28.34% × 0.45 × 2.52

Based on: 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27), 10-K (reporting date: 2018-07-28).

The primary reason for the decrease in return on equity ratio (ROE) over 2023 year is the decrease in operating profitability measured by EBIT margin ratio.

Two-Component Disaggregation of ROA

Cisco Systems Inc., decomposition of ROA

Microsoft Excel
ROA = Net Profit Margin × Asset Turnover
Jul 29, 2023 12.38% = 22.13% × 0.56
Jul 30, 2022 12.57% = 22.91% × 0.55
Jul 31, 2021 10.86% = 21.26% × 0.51
Jul 25, 2020 11.82% = 22.75% × 0.52
Jul 27, 2019 11.88% = 22.39% × 0.53
Jul 28, 2018 0.10% = 0.22% × 0.45

Based on: 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27), 10-K (reporting date: 2018-07-28).

The primary reason for the decrease in return on assets ratio (ROA) over 2023 year is the decrease in profitability measured by net profit margin ratio.

Four-Component Disaggregation of ROA

Cisco Systems Inc., decomposition of ROA

Microsoft Excel
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Jul 29, 2023 12.38% = 0.82 × 0.97 × 27.62% × 0.56
Jul 30, 2022 12.57% = 0.82 × 0.98 × 28.78% × 0.55
Jul 31, 2021 10.86% = 0.80 × 0.97 × 27.49% × 0.51
Jul 25, 2020 11.82% = 0.80 × 0.96 × 29.52% × 0.52
Jul 27, 2019 11.88% = 0.80 × 0.94 × 29.73% × 0.53
Jul 28, 2018 0.10% = 0.01 × 0.93 × 28.34% × 0.45

Based on: 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27), 10-K (reporting date: 2018-07-28).

The primary reason for the decrease in return on assets ratio (ROA) over 2023 year is the decrease in operating profitability measured by EBIT margin ratio.

Disaggregation of Net Profit Margin

Cisco Systems Inc., decomposition of net profit margin ratio

Microsoft Excel
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Jul 29, 2023 22.13% = 0.82 × 0.97 × 27.62%
Jul 30, 2022 22.91% = 0.82 × 0.98 × 28.78%
Jul 31, 2021 21.26% = 0.80 × 0.97 × 27.49%
Jul 25, 2020 22.75% = 0.80 × 0.96 × 29.52%
Jul 27, 2019 22.39% = 0.80 × 0.94 × 29.73%
Jul 28, 2018 0.22% = 0.01 × 0.93 × 28.34%

Based on: 10-K (reporting date: 2023-07-29), 10-K (reporting date: 2022-07-30), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-25), 10-K (reporting date: 2019-07-27), 10-K (reporting date: 2018-07-28).

The primary reason for the decrease in net profit margin ratio over 2023 year is the decrease in operating profitability measured by EBIT margin ratio.