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Vale S.A. (VALE) | 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

Vale S.A., decomposition of ROE

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  ROE = ROA × Leverage
Dec 31, 2012 7.42%   4.19%   1.77
Dec 31, 2011 29.45%   17.78%   1.66
Dec 31, 2010 25.06%   13.37%   1.87
Dec 31, 2009 9.39%   5.23%   1.80
Dec 31, 2008 31.06%   16.54%   1.88

Source: Based on data from Vale S.A. 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

Vale S.A., decomposition of ROE

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  ROE = Net Profit Margin × Asset Turnover × Leverage
Dec 31, 2012 7.42%   11.30%   0.37   1.77
Dec 31, 2011 29.45%   37.90%   0.47   1.66
Dec 31, 2010 25.06%   37.14%   0.36   1.87
Dec 31, 2009 9.39%   22.34%   0.23   1.80
Dec 31, 2008 31.06%   34.32%   0.48   1.88

Source: Based on data from Vale S.A. 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

Vale S.A., decomposition of ROE

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  ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Leverage
Dec 31, 2012 7.42%   1.18   0.66   14.55%   0.37   1.77
Dec 31, 2011 29.45%   0.81   0.92   50.72%   0.47   1.66
Dec 31, 2010 25.06%   0.82   0.89   50.81%   0.36   1.87
Dec 31, 2009 9.39%   0.72   0.83   37.62%   0.23   1.80
Dec 31, 2008 31.06%   0.96   0.89   40.30%   0.48   1.88

Source: Based on data from Vale S.A. 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

Vale S.A., decomposition of ROA

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  ROA = Net Profit Margin × Asset Turnover
Dec 31, 2012 4.19%   11.30%   0.37
Dec 31, 2011 17.78%   37.90%   0.47
Dec 31, 2010 13.37%   37.14%   0.36
Dec 31, 2009 5.23%   22.34%   0.23
Dec 31, 2008 16.54%   34.32%   0.48

Source: Based on data from Vale S.A. 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

Vale S.A., decomposition of ROA

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  ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2012 4.19%   1.18   0.66   14.55%   0.37
Dec 31, 2011 17.78%   0.81   0.92   50.72%   0.47
Dec 31, 2010 13.37%   0.82   0.89   50.81%   0.36
Dec 31, 2009 5.23%   0.72   0.83   37.62%   0.23
Dec 31, 2008 16.54%   0.96   0.89   40.30%   0.48

Source: Based on data from Vale S.A. 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

Vale S.A., decomposition of Net Profit Margin

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  Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2012 11.30%   1.18   0.66   14.55%
Dec 31, 2011 37.90%   0.81   0.92   50.72%
Dec 31, 2010 37.14%   0.82   0.89   50.81%
Dec 31, 2009 22.34%   0.72   0.83   37.62%
Dec 31, 2008 34.32%   0.96   0.89   40.30%

Source: Based on data from Vale S.A. 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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