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DuPont Analysis: Decomposition of ROE

Difficulty: Beginner


Two-Component Disaggregation of ROE

Automatic Data Processing Inc., decomposition of ROE

 
ROE = ROA × Leverage
Jun 30, 2017 % %
Jun 30, 2016 % %
Jun 30, 2015 % %
Jun 30, 2014 % %
Jun 30, 2013 % %
Jun 30, 2012 % %

Source: Based on data from Automatic Data Processing Inc. Annual Reports

 

The primary reason for the increase in Return on Equity (ROE) over 2017 year is the increase in profitability measured by Return on Assets (ROA).

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Three-Component Disaggregation of ROE

Automatic Data Processing Inc., decomposition of ROE

 
ROE = Net Profit Margin × Asset Turnover × Leverage
Jun 30, 2017 % %
Jun 30, 2016 % %
Jun 30, 2015 % %
Jun 30, 2014 % %
Jun 30, 2013 % %
Jun 30, 2012 % %

Source: Based on data from Automatic Data Processing Inc. Annual Reports

 

The primary reason for the increase in Return on Equity (ROE) over 2017 year is the increase in efficiency measured by Asset Turnover.

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Five-Component Disaggregation of ROE

Automatic Data Processing Inc., decomposition of ROE

 
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Leverage
Jun 30, 2017 % %
Jun 30, 2016 % %
Jun 30, 2015 % %
Jun 30, 2014 % %
Jun 30, 2013 % %
Jun 30, 2012 % %

Source: Based on data from Automatic Data Processing Inc. Annual Reports

 

The primary reason for the increase in Return on Equity (ROE) over 2017 year is the increase in efficiency measured by Asset Turnover.

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Two-Way Decomposition of ROA

Automatic Data Processing Inc., decomposition of ROA

 
ROA = Net Profit Margin × Asset Turnover
Jun 30, 2017 % %
Jun 30, 2016 % %
Jun 30, 2015 % %
Jun 30, 2014 % %
Jun 30, 2013 % %
Jun 30, 2012 % %

Source: Based on data from Automatic Data Processing Inc. Annual Reports

 

The primary reason for the increase in Return on Assets (ROA) over 2017 year is the increase in Asset Turnover.

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Four-Way Decomposition of ROA

Automatic Data Processing Inc., decomposition of ROA

 
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Jun 30, 2017 % %
Jun 30, 2016 % %
Jun 30, 2015 % %
Jun 30, 2014 % %
Jun 30, 2013 % %
Jun 30, 2012 % %

Source: Based on data from Automatic Data Processing Inc. Annual Reports

 

The primary reason for the increase in Return on Assets (ROA) over 2017 year is the increase in efficiency measured by Asset Turnover.

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Decomposition of Net Profit Margin

Automatic Data Processing Inc., decomposition of Net Profit Margin

 
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Jun 30, 2017 % %
Jun 30, 2016 % %
Jun 30, 2015 % %
Jun 30, 2014 % %
Jun 30, 2013 % %
Jun 30, 2012 % %

Source: Based on data from Automatic Data Processing Inc. Annual Reports

 

The primary reason for the increase in Net Profit Margin over 2017 year is the increase in operating profitability measured by EBIT Margin.

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