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McDonald's Corp. (MCD) | DuPont Analysis: Decomposition of ROE

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


Two-Component Disaggregation of ROE

McDonald's Corp., decomposition of ROE

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  ROE = ROA × Leverage
Dec 31, 2012 35.73%   15.44%   2.31
Dec 31, 2011 38.24%   16.68%   2.29
Dec 31, 2010 33.80%   15.47%   2.18
Dec 31, 2009 32.43%   15.06%   2.15
Dec 31, 2008 32.23%   15.15%   2.13

Source: Based on data from McDonald's Corp. Annual Reports

 

The primary reason for the decrease in Return on Equity (ROE) over 2012 year is the decrease in profitability measured by Return on Assets (ROA).

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Three-Component Disaggregation of ROE

McDonald's Corp., decomposition of ROE

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  ROE = Net Profit Margin × Asset Turnover × Leverage
Dec 31, 2012 35.73%   19.82%   0.78   2.31
Dec 31, 2011 38.24%   20.38%   0.82   2.29
Dec 31, 2010 33.80%   20.55%   0.75   2.18
Dec 31, 2009 32.43%   20.01%   0.75   2.15
Dec 31, 2008 32.23%   18.34%   0.83   2.13

Source: Based on data from McDonald's Corp. Annual Reports

 

The primary reason for the decrease in Return on Equity (ROE) over 2012 year is the decrease in profitability measured by Net Profit Margin.

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Five-Component Disaggregation of ROE

McDonald's Corp., decomposition of ROE

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  ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Leverage
Dec 31, 2012 35.73%   0.68   0.94   31.18%   0.78   2.31
Dec 31, 2011 38.24%   0.69   0.94   31.49%   0.82   2.29
Dec 31, 2010 33.80%   0.71   0.94   30.95%   0.75   2.18
Dec 31, 2009 32.43%   0.70   0.93   30.60%   0.75   2.15
Dec 31, 2008 32.23%   0.70   0.92   28.40%   0.83   2.13

Source: Based on data from McDonald's Corp. Annual Reports

 

The primary reason for the decrease in Return on Equity (ROE) over 2012 year is the decrease in operating profitability measured by EBIT Margin.

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Two-Way Decomposition of ROA

McDonald's Corp., decomposition of ROA

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  ROA = Net Profit Margin × Asset Turnover
Dec 31, 2012 15.44%   19.82%   0.78
Dec 31, 2011 16.68%   20.38%   0.82
Dec 31, 2010 15.47%   20.55%   0.75
Dec 31, 2009 15.06%   20.01%   0.75
Dec 31, 2008 15.15%   18.34%   0.83

Source: Based on data from McDonald's Corp. Annual Reports

 

The primary reason for the decrease in Return on Assets (ROA) over 2012 year is the decrease in profitability measured by Net Profit Margin.

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Four-Way Decomposition of ROA

McDonald's Corp., decomposition of ROA

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  ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2012 15.44%   0.68   0.94   31.18%   0.78
Dec 31, 2011 16.68%   0.69   0.94   31.49%   0.82
Dec 31, 2010 15.47%   0.71   0.94   30.95%   0.75
Dec 31, 2009 15.06%   0.70   0.93   30.60%   0.75
Dec 31, 2008 15.15%   0.70   0.92   28.40%   0.83

Source: Based on data from McDonald's Corp. Annual Reports

 

The primary reason for the decrease in Return on Assets (ROA) over 2012 year is the decrease in operating profitability measured by EBIT Margin.

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Decomposition of Net Profit Margin

McDonald's Corp., decomposition of Net Profit Margin

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  Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2012 19.82%   0.68   0.94   31.18%
Dec 31, 2011 20.38%   0.69   0.94   31.49%
Dec 31, 2010 20.55%   0.71   0.94   30.95%
Dec 31, 2009 20.01%   0.70   0.93   30.60%
Dec 31, 2008 18.34%   0.70   0.92   28.40%

Source: Based on data from McDonald's Corp. Annual Reports

 

The primary reason for the decrease in Net Profit Margin over 2012 year is the decrease in operating profitability measured by EBIT Margin.

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