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Target Corp. (TGT) | 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

Target Corp., decomposition of ROE

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  ROE = ROA × Leverage
Feb 2, 2013 18.11%   6.23%   2.91
Jan 28, 2012 18.51%   6.28%   2.95
Jan 29, 2011 18.85%   6.68%   2.82
Jan 30, 2010 16.21%   5.59%   2.90
Jan 31, 2009 16.15%   5.02%   3.22
Feb 2, 2008 18.61%   6.39%   2.91

Source: Based on data from Target Corp. Annual Reports

 

The primary reason for the decrease in Return on Equity (ROE) over 2013 year is the decrease in profitability measured by Return on Assets (ROA).

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Three-Component Disaggregation of ROE

Target Corp., decomposition of ROE

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  ROE = Net Profit Margin × Asset Turnover × Leverage
Feb 2, 2013 18.11%   4.09%   1.52   2.91
Jan 28, 2012 18.51%   4.19%   1.50   2.95
Jan 29, 2011 18.85%   4.33%   1.54   2.82
Jan 30, 2010 16.21%   3.81%   1.47   2.90
Jan 31, 2009 16.15%   3.41%   1.47   3.22
Feb 2, 2008 18.61%   4.50%   1.42   2.91

Source: Based on data from Target Corp. Annual Reports

 

The primary reason for the decrease in Return on Equity (ROE) over 2013 year is the decrease in profitability measured by Net Profit Margin.

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Five-Component Disaggregation of ROE

Target Corp., decomposition of ROE

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  ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Leverage
Feb 2, 2013 18.11%   0.65   0.86   7.33%   1.52   2.91
Jan 28, 2012 18.51%   0.66   0.84   7.62%   1.50   2.95
Jan 29, 2011 18.85%   0.65   0.86   7.79%   1.54   2.82
Jan 30, 2010 16.21%   0.64   0.83   7.15%   1.47   2.90
Jan 31, 2009 16.15%   0.63   0.80   6.78%   1.47   3.22
Feb 2, 2008 18.61%   0.62   0.88   8.32%   1.42   2.91

Source: Based on data from Target Corp. Annual Reports

 

The primary reason for the decrease in Return on Equity (ROE) over 2013 year is the decrease in operating profitability measured by EBIT Margin.

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Two-Way Decomposition of ROA

Target Corp., decomposition of ROA

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  ROA = Net Profit Margin × Asset Turnover
Feb 2, 2013 6.23%   4.09%   1.52
Jan 28, 2012 6.28%   4.19%   1.50
Jan 29, 2011 6.68%   4.33%   1.54
Jan 30, 2010 5.59%   3.81%   1.47
Jan 31, 2009 5.02%   3.41%   1.47
Feb 2, 2008 6.39%   4.50%   1.42

Source: Based on data from Target Corp. Annual Reports

 

The primary reason for the decrease in Return on Assets (ROA) over 2013 year is the decrease in profitability measured by Net Profit Margin.

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Four-Way Decomposition of ROA

Target Corp., decomposition of ROA

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  ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Feb 2, 2013 6.23%   0.65   0.86   7.33%   1.52
Jan 28, 2012 6.28%   0.66   0.84   7.62%   1.50
Jan 29, 2011 6.68%   0.65   0.86   7.79%   1.54
Jan 30, 2010 5.59%   0.64   0.83   7.15%   1.47
Jan 31, 2009 5.02%   0.63   0.80   6.78%   1.47
Feb 2, 2008 6.39%   0.62   0.88   8.32%   1.42

Source: Based on data from Target Corp. Annual Reports

 

The primary reason for the decrease in Return on Assets (ROA) over 2013 year is the decrease in operating profitability measured by EBIT Margin.

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Decomposition of Net Profit Margin

Target Corp., decomposition of Net Profit Margin

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  Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Feb 2, 2013 4.09%   0.65   0.86   7.33%
Jan 28, 2012 4.19%   0.66   0.84   7.62%
Jan 29, 2011 4.33%   0.65   0.86   7.79%
Jan 30, 2010 3.81%   0.64   0.83   7.15%
Jan 31, 2009 3.41%   0.63   0.80   6.78%
Feb 2, 2008 4.50%   0.62   0.88   8.32%

Source: Based on data from Target Corp. Annual Reports

 

The primary reason for the decrease in Net Profit Margin over 2013 year is the decrease in operating profitability measured by EBIT Margin.

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