DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
Two-Component Disaggregation of ROE
Booking Holdings Inc., decomposition of ROE
| ROE | = | ROA | × | Financial Leverage | |
|---|---|---|---|---|---|
| Dec 31, 2024 | — | = | 21.23% | × | — |
| Dec 31, 2023 | — | = | 17.62% | × | — |
| Dec 31, 2022 | 109.92% | = | 12.06% | × | 9.12 |
| Dec 31, 2021 | 18.86% | = | 4.93% | × | 3.83 |
| Dec 31, 2020 | 1.21% | = | 0.27% | × | 4.47 |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Return on Assets (ROA)
- The ROA exhibits a consistent and significant upward trend over the observed periods. Starting at a low level of 0.27% in 2020, it increases sharply to 4.93% in 2021, then more than doubles to 12.06% in 2022. The upward trajectory continues with ROA reaching 17.62% in 2023 and further improving to 21.23% by 2024. This progression indicates steadily enhanced operational efficiency and asset utilization over the years.
- Financial Leverage
- The financial leverage ratio shows variability within the available data. Initially, it declines from 4.47 in 2020 to 3.83 in 2021, suggesting a reduction in reliance on debt financing. However, in 2022, there is a notable increase to 9.12, indicating a substantial rise in leverage. Subsequent data for 2023 and 2024 is not available, limiting further analysis of this trend.
- Return on Equity (ROE)
- The ROE demonstrates a strong positive trend in the reported periods. From a modest 1.21% in 2020, it sharply rises to 18.86% in 2021. A remarkable jump is seen in 2022, with ROE reaching an exceptional figure of 109.92%, which likely reflects extraordinary financial performance or one-time events significantly boosting equity returns. Data beyond 2022 is not provided, so the sustainability of this peak cannot be assessed.
- Overall Insights
- The data reveals improving profitability and efficiency over the period analyzed, as evidenced by rising ROA and ROE figures. The spike in financial leverage in 2022 coincides with the extraordinary increase in ROE, suggesting that increased debt may have amplified equity returns during that year. The absence of financial leverage and ROE data in later years limits the assessment of ongoing financial risk and shareholder returns. Nonetheless, the growing ROA trend signals ongoing improvements in operational performance and asset management.
Three-Component Disaggregation of ROE
Booking Holdings Inc., decomposition of ROE
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Net Profit Margin
- The net profit margin displays a consistent upward trajectory over the reported periods. Starting from a very low margin of 0.87% in 2020, it rises substantially to 10.63% in 2021, and continues this positive trend through 2022 and 2023, reaching 20.07%. The most recent figure for 2024 shows a further increase to 24.78%. This steady improvement suggests enhanced profitability and operational efficiency over time.
- Asset Turnover
- Asset turnover also exhibits a clear increasing pattern from 0.31 in 2020 to 0.46 in 2021, and then experiences a more pronounced rise to 0.67 in 2022, peaking at 0.88 in 2023. The slight decrease to 0.86 in 2024 indicates a marginal reduction in efficiency in generating revenue from assets, although the value remains strong relative to earlier years. Overall, the company has improved its utilization of assets to generate sales significantly.
- Financial Leverage
- Financial leverage shows variability during the available years. Initially, it decreases from 4.47 in 2020 to 3.83 in 2021, indicating a reduction in reliance on debt or equity financing. However, a sharp increase to 9.12 is observed in 2022, suggesting a notable increase in leverage, potentially reflecting a change in capital structure or increased borrowing. Data for 2023 and 2024 are not available, so it is not possible to determine subsequent leverage trends.
- Return on Equity (ROE)
- Return on equity improves significantly from 1.21% in 2020 to 18.86% in 2021, then surges dramatically to 109.92% in 2022. This sharp increase aligns with the spike in financial leverage observed in 2022, indicating that the high leverage may have augmented shareholder returns substantially. Data for later years are missing, so continuity of this trend cannot be confirmed.
Five-Component Disaggregation of ROE
Booking Holdings Inc., decomposition of ROE
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Tax Burden
- The tax burden ratio shows a significant increase from 0.1 in 2020 to 0.8 in 2021, then stabilizes around 0.78 in 2022 and 2023, with a slight increase to 0.81 in 2024. This indicates a shift toward a higher effective tax rate after 2020, maintaining relatively stable levels in subsequent years.
- Interest Burden
- The interest burden ratio improved notably from 0.61 in 2020 to 0.81 in 2021, reaching a peak of 0.91 in 2022, followed by a minor decline to 0.86 in 2023 and 0.85 in 2024. This suggests enhanced ability to cover interest expenses during the initial years, with a slight reduction in efficiency afterward.
- EBIT Margin
- The EBIT margin exhibited a consistent upward trend, increasing from 13.58% in 2020 to 16.42% in 2021, then surging to 25.24% in 2022, 29.85% in 2023, and reaching 36.17% in 2024. This reflects strong growth in operational profitability over the period.
- Asset Turnover
- Asset turnover ratio improved steadily from 0.31 in 2020 to 0.46 in 2021, 0.67 in 2022, peaking at 0.88 in 2023, and slightly decreasing to 0.86 in 2024. This trend indicates increasing efficiency in generating revenue from assets, with slight stabilization in the last year.
- Financial Leverage
- The financial leverage ratio decreased from 4.47 in 2020 to 3.83 in 2021, followed by a sharp increase to 9.12 in 2022. Data for 2023 and 2024 is missing. The abrupt increase in 2022 suggests a significant rise in the use of debt relative to equity during that year.
- Return on Equity (ROE)
- ROE showed dramatic growth from 1.21% in 2020 to 18.86% in 2021, then skyrocketed to 109.92% in 2022. Recent years' data are unavailable. The extreme rise in 2022 may reflect the combined effect of increased profitability, asset efficiency, and financial leverage but requires further data for confirmation.
Two-Component Disaggregation of ROA
Booking Holdings Inc., decomposition of ROA
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Net Profit Margin
- The net profit margin exhibited a consistent and significant upward trend over the five-year period. Starting at a low point of 0.87% at the end of 2020, it increased markedly to 10.63% in 2021, followed by continued growth to 17.89% in 2022, 20.07% in 2023, and reaching 24.78% by the end of 2024. This steady increase indicates improving profitability and efficiency in cost management, leading to a higher proportion of revenue being converted into net profit.
- Asset Turnover
- The asset turnover ratio showed a progressive increase from 0.31 in 2020 to 0.46 in 2021 and further to 0.67 in 2022, illustrating an enhancement in the company’s ability to generate sales from its assets. This upward trend continued with the ratio peaking at 0.88 in 2023 before experiencing a slight decline to 0.86 in 2024. The overall improvement over the period signifies more effective utilization of assets, although the marginal dip in the final year may suggest either increased asset base without equivalent sales growth or a minor reduction in operational efficiency.
- Return on Assets (ROA)
- Return on assets showed a substantial rise throughout the analyzed period, beginning at a modest 0.27% in 2020. It increased sharply to 4.93% in 2021, followed by further increases to 12.06% in 2022, 17.62% in 2023, and achieving 21.23% in 2024. This trend corresponds with the improvements in net profit margin and asset turnover, reflecting enhanced profitability relative to the asset base and indicating more effective overall asset management and operational performance.
Four-Component Disaggregation of ROA
Booking Holdings Inc., decomposition of ROA
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Tax Burden
- The tax burden ratio experienced a significant increase from 0.10 in 2020 to 0.80 in 2021 and then remained relatively stable, fluctuating slightly around 0.78 to 0.81 through 2024. This indicates a substantial rise in the proportion of earnings retained after tax starting in 2021, maintaining a higher level in subsequent years.
- Interest Burden
- The interest burden ratio showed improvement from 0.61 in 2020 to 0.81 in 2021, moving upward to a peak of 0.91 in 2022, followed by a slight decline to 0.85 by 2024. This suggests that the company managed its interest expenses more efficiently starting in 2021, although there was some moderate fluctuation afterwards.
- EBIT Margin
- There was a notable upward trend in the EBIT margin, rising steadily from 13.58% in 2020 to 36.17% by 2024. The improvement was especially marked between 2021 and 2024, signaling increased operational profitability and improved cost management over the period.
- Asset Turnover
- The asset turnover ratio improved considerably from 0.31 in 2020 to 0.88 in 2023, before slightly declining to 0.86 in 2024. This trend indicates enhanced efficiency in the use of assets to generate revenue, reaching a peak efficiency level in 2023.
- Return on Assets (ROA)
- ROA increased significantly from a marginal 0.27% in 2020 to a strong 21.23% in 2024. The growth was continuous and pronounced over the five-year span, reflecting the combined positive effects of improved profitability, cost control, and asset utilization.
Disaggregation of Net Profit Margin
Booking Holdings Inc., decomposition of net profit margin ratio
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Tax Burden
- The tax burden ratio exhibited a substantial increase from 0.1 in 2020 to approximately 0.8 in 2021, remaining relatively stable thereafter. From 2021 through 2024, the ratio fluctuated slightly between 0.78 and 0.81, indicating consistency in the effective tax rate applied to earnings during this period.
- Interest Burden
- The interest burden ratio improved notably from 0.61 in 2020 to a peak of 0.91 in 2022, suggesting a reduction in interest expenses relative to earnings before interest and taxes (EBIT). Following this peak, the ratio experienced a slight decline, settling near 0.85 by 2024. Overall, the trend reflects enhanced operational efficiency with respect to interest costs over the years.
- EBIT Margin
- There was a marked upward trend in EBIT margin over the period analyzed. Starting at 13.58% in 2020, the margin rose steadily to 36.17% by 2024. This significant improvement signals increased operational profitability and a stronger ability to generate earnings from core business activities before interest and taxes.
- Net Profit Margin
- The net profit margin displayed notable growth, increasing from a modest 0.87% in 2020 to 24.78% in 2024. This reflects considerable enhancement in overall profitability, incorporating operational efficiency, tax effects, and interest expenses. The consistent annual rise indicates effective management of costs and revenue generation capacity, culminating in substantially improved bottom-line performance.