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DuPont Analysis: Decomposition of ROE
Difficulty: Beginner
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
Based on: 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), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).
The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in profitability measured by Return on Assets (ROA).
Three-Component Disaggregation of ROE
Cisco Systems Inc., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Leverage | |
|---|---|---|---|---|---|---|---|
| Jul 28, 2018 | |
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| Jul 29, 2017 | |
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| Jul 30, 2016 | |
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| Jul 25, 2015 | |
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| Jul 26, 2014 | |
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| Jul 27, 2013 | |
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Based on: 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), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).
The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in profitability measured by Net Profit Margin.
Five-Component Disaggregation of ROE
Cisco Systems Inc., decomposition of ROE
| ROE | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | × | Leverage | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Jul 28, 2018 | |
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| Jul 29, 2017 | |
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| Jul 30, 2016 | |
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| Jul 25, 2015 | |
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| Jul 26, 2014 | |
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| Jul 27, 2013 | |
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Based on: 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), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).
The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in effect of taxes measured by Tax Burden.
Two-Way Decomposition of ROA
Cisco Systems Inc., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Jul 28, 2018 | |
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| Jul 29, 2017 | |
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| Jul 30, 2016 | |
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| Jul 25, 2015 | |
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| Jul 26, 2014 | |
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| Jul 27, 2013 | |
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Based on: 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), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).
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
Cisco Systems Inc., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Jul 28, 2018 | |
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| Jul 29, 2017 | |
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| Jul 30, 2016 | |
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| Jul 25, 2015 | |
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| Jul 26, 2014 | |
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| Jul 27, 2013 | |
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Based on: 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), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).
The primary reason for the decrease in Return on Assets (ROA) over 2018 year is the decrease in effect of taxes measured by Tax Burden.
Decomposition of Net Profit Margin
Cisco Systems Inc., decomposition of Net Profit Margin
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Jul 28, 2018 | |
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| Jul 29, 2017 | |
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| Jul 30, 2016 | |
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| Jul 25, 2015 | |
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| Jul 26, 2014 | |
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| Jul 27, 2013 | |
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Based on: 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), 10-K (filing date: 2014-09-09), 10-K (filing date: 2013-09-10).
The primary reason for the decrease in Net Profit Margin over 2018 year is the decrease in effect of taxes measured by Tax Burden.