Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Cisco Systems Inc. (NASDAQ:CSCO)

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin

Beginner level

Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.

Two-Component Disaggregation of ROE

Cisco Systems Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Financial Leverage
Jul 25, 2020 29.57% = 11.82% × 2.50
Jul 27, 2019 34.62% = 11.88% × 2.91
Jul 28, 2018 0.25% = 0.10% × 2.52
Jul 29, 2017 14.53% = 7.40% × 1.96
Jul 30, 2016 16.89% = 8.83% × 1.91
Jul 25, 2015 15.04% = 7.91% × 1.90

Based on: 10-K (filing date: 2020-09-03), 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08).

The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in financial leverage ratio.

Three-Component Disaggregation of ROE

Cisco Systems Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Jul 25, 2020 29.57% = 22.75% × 0.52 × 2.50
Jul 27, 2019 34.62% = 22.39% × 0.53 × 2.91
Jul 28, 2018 0.25% = 0.22% × 0.45 × 2.52
Jul 29, 2017 14.53% = 20.02% × 0.37 × 1.96
Jul 30, 2016 16.89% = 21.81% × 0.40 × 1.91
Jul 25, 2015 15.04% = 18.27% × 0.43 × 1.90

Based on: 10-K (filing date: 2020-09-03), 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08).

The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in financial leverage ratio.

Five-Component Disaggregation of ROE

Cisco Systems Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Jul 25, 2020 29.57% = 0.80 × 0.96 × 29.52% × 0.52 × 2.50
Jul 27, 2019 34.62% = 0.80 × 0.94 × 29.73% × 0.53 × 2.91
Jul 28, 2018 0.25% = 0.01 × 0.93 × 28.34% × 0.45 × 2.52
Jul 29, 2017 14.53% = 0.78 × 0.93 × 27.39% × 0.37 × 1.96
Jul 30, 2016 16.89% = 0.83 × 0.95 × 27.61% × 0.40 × 1.91
Jul 25, 2015 15.04% = 0.80 × 0.95 × 23.94% × 0.43 × 1.90

Based on: 10-K (filing date: 2020-09-03), 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08).

The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in financial leverage ratio.

Two-Component Disaggregation of ROA

Cisco Systems Inc., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
Jul 25, 2020 11.82% = 22.75% × 0.52
Jul 27, 2019 11.88% = 22.39% × 0.53
Jul 28, 2018 0.10% = 0.22% × 0.45
Jul 29, 2017 7.40% = 20.02% × 0.37
Jul 30, 2016 8.83% = 21.81% × 0.40
Jul 25, 2015 7.91% = 18.27% × 0.43

Based on: 10-K (filing date: 2020-09-03), 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08).

The primary reason for the decrease in return on assets ratio (ROA) over 2020 year is the decrease in asset turnover ratio.

Four-Component Disaggregation of ROA

Cisco Systems Inc., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Jul 25, 2020 11.82% = 0.80 × 0.96 × 29.52% × 0.52
Jul 27, 2019 11.88% = 0.80 × 0.94 × 29.73% × 0.53
Jul 28, 2018 0.10% = 0.01 × 0.93 × 28.34% × 0.45
Jul 29, 2017 7.40% = 0.78 × 0.93 × 27.39% × 0.37
Jul 30, 2016 8.83% = 0.83 × 0.95 × 27.61% × 0.40
Jul 25, 2015 7.91% = 0.80 × 0.95 × 23.94% × 0.43

Based on: 10-K (filing date: 2020-09-03), 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08).

The primary reason for the decrease in return on assets ratio (ROA) over 2020 year is the decrease in efficiency measured by asset turnover ratio.

Disaggregation of Net Profit Margin

Cisco Systems Inc., decomposition of net profit margin ratio

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Jul 25, 2020 22.75% = 0.80 × 0.96 × 29.52%
Jul 27, 2019 22.39% = 0.80 × 0.94 × 29.73%
Jul 28, 2018 0.22% = 0.01 × 0.93 × 28.34%
Jul 29, 2017 20.02% = 0.78 × 0.93 × 27.39%
Jul 30, 2016 21.81% = 0.83 × 0.95 × 27.61%
Jul 25, 2015 18.27% = 0.80 × 0.95 × 23.94%

Based on: 10-K (filing date: 2020-09-03), 10-K (filing date: 2019-09-05), 10-K (filing date: 2018-09-06), 10-K (filing date: 2017-09-07), 10-K (filing date: 2016-09-08), 10-K (filing date: 2015-09-08).

The primary reason for the increase in net profit margin ratio over 2020 year is the increase in effect of interest expense measured by interest burden ratio.