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DuPont Analysis: Decomposition of ROE

Difficulty: Beginner


Two-Component Disaggregation of ROE

Automatic Data Processing Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Leverage
Jun 30, 2018 hidden% hidden% hidden
Jun 30, 2017 hidden% hidden% hidden
Jun 30, 2016 hidden% hidden% hidden
Jun 30, 2015 hidden% hidden% hidden
Jun 30, 2014 hidden% hidden% hidden
Jun 30, 2013 hidden% hidden% hidden

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

 

The primary reason for the increase in Return on Equity (ROE) over 2018 year is the increase in Financial Leverage.


Three-Component Disaggregation of ROE

Automatic Data Processing Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Leverage
Jun 30, 2018 hidden% hidden% hidden hidden
Jun 30, 2017 hidden% hidden% hidden hidden
Jun 30, 2016 hidden% hidden% hidden hidden
Jun 30, 2015 hidden% hidden% hidden hidden
Jun 30, 2014 hidden% hidden% hidden hidden
Jun 30, 2013 hidden% hidden% hidden hidden

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

 

The primary reason for the increase in Return on Equity (ROE) over 2018 year is the increase in Financial Leverage.


Five-Component Disaggregation of ROE

Automatic Data Processing Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Leverage
Jun 30, 2018 hidden% hidden hidden hidden% hidden hidden
Jun 30, 2017 hidden% hidden hidden hidden% hidden hidden
Jun 30, 2016 hidden% hidden hidden hidden% hidden hidden
Jun 30, 2015 hidden% hidden hidden hidden% hidden hidden
Jun 30, 2014 hidden% hidden hidden hidden% hidden hidden
Jun 30, 2013 hidden% hidden hidden hidden% hidden hidden

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

 

The primary reason for the increase in Return on Equity (ROE) over 2018 year is the increase in Financial Leverage.


Two-Way Decomposition of ROA

Automatic Data Processing Inc., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
Jun 30, 2018 hidden% hidden% hidden
Jun 30, 2017 hidden% hidden% hidden
Jun 30, 2016 hidden% hidden% hidden
Jun 30, 2015 hidden% hidden% hidden
Jun 30, 2014 hidden% hidden% hidden
Jun 30, 2013 hidden% hidden% hidden

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

 

The primary reason for the decrease in Return on Assets (ROA) over 2018 year is the decrease in profitability measured by Net Profit Margin.


Four-Way Decomposition of ROA

Automatic Data Processing Inc., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Jun 30, 2018 hidden% hidden hidden hidden% hidden
Jun 30, 2017 hidden% hidden hidden hidden% hidden
Jun 30, 2016 hidden% hidden hidden hidden% hidden
Jun 30, 2015 hidden% hidden hidden hidden% hidden
Jun 30, 2014 hidden% hidden hidden hidden% hidden
Jun 30, 2013 hidden% hidden hidden hidden% hidden

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

 

The primary reason for the decrease in Return on Assets (ROA) over 2018 year is the decrease in operating profitability measured by EBIT Margin.


Decomposition of Net Profit Margin

Automatic Data Processing Inc., decomposition of Net Profit Margin

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Jun 30, 2018 hidden% hidden hidden hidden%
Jun 30, 2017 hidden% hidden hidden hidden%
Jun 30, 2016 hidden% hidden hidden hidden%
Jun 30, 2015 hidden% hidden hidden hidden%
Jun 30, 2014 hidden% hidden hidden hidden%
Jun 30, 2013 hidden% hidden hidden hidden%

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

 

The primary reason for the decrease in Net Profit Margin over 2018 year is the decrease in operating profitability measured by EBIT Margin.