DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Quarterly Data
Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
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Two-Component Disaggregation of ROE
Cisco Systems Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-04-26), 10-Q (reporting date: 2025-01-25), 10-Q (reporting date: 2024-10-26), 10-K (reporting date: 2024-07-27), 10-Q (reporting date: 2024-04-27), 10-Q (reporting date: 2024-01-27), 10-Q (reporting date: 2023-10-28), 10-K (reporting date: 2023-07-29), 10-Q (reporting date: 2023-04-29), 10-Q (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-K (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-Q (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-K (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-Q (reporting date: 2021-01-23), 10-Q (reporting date: 2020-10-24), 10-K (reporting date: 2020-07-25), 10-Q (reporting date: 2020-04-25), 10-Q (reporting date: 2020-01-25), 10-Q (reporting date: 2019-10-26), 10-K (reporting date: 2019-07-27), 10-Q (reporting date: 2019-04-27), 10-Q (reporting date: 2019-01-26), 10-Q (reporting date: 2018-10-27).
- Return on Assets (ROA)
- Over the observed periods, Return on Assets exhibits a generally positive trend with some fluctuations. Starting at approximately 11.88% in late 2018, the ROA shows a gradual increase reaching a peak around 13.75% in early 2024, indicating improving efficiency in asset utilization over time. However, after this peak, a noticeable decline occurs, dropping to 7.57% by mid-2024 before a slight rebound to 8.17% towards the end of the dataset. This pattern suggests periods of strong operational performance followed by a phase of decreased asset productivity.
- Financial Leverage
- Financial Leverage shows variability throughout the time frame. It starts at 2.4 and generally increases to a peak around 2.91 in mid-2019, indicating an increased use of debt relative to equity during this period. After this peak, leverage trends downward, stabilizing close to 2.3 for an extended period across late 2019 to early 2024, suggesting a more conservative capital structure. Notably, a spike back to 2.74 occurs in early 2024, followed by a slight decline towards the end of the period, which might signal a temporary increase in financial risk or strategic leverage adjustment.
- Return on Equity (ROE)
- The Return on Equity exhibits a generally declining trend with some recovery phases. Starting at a high of 34.62% near the end of 2018, the ROE consistently decreases to about 25.41% by mid-2021, indicating reduced profitability on shareholders' equity. Subsequently, a moderate rising trend brings ROE up near 30.04% by early 2024, implying improved returns to equity holders. However, the last part of the dataset shows a decline back to roughly 20.18% and a slight recovery to 21.32%, suggesting recent challenges in maintaining equity profitability.
Three-Component Disaggregation of ROE
Cisco Systems Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-04-26), 10-Q (reporting date: 2025-01-25), 10-Q (reporting date: 2024-10-26), 10-K (reporting date: 2024-07-27), 10-Q (reporting date: 2024-04-27), 10-Q (reporting date: 2024-01-27), 10-Q (reporting date: 2023-10-28), 10-K (reporting date: 2023-07-29), 10-Q (reporting date: 2023-04-29), 10-Q (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-K (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-Q (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-K (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-Q (reporting date: 2021-01-23), 10-Q (reporting date: 2020-10-24), 10-K (reporting date: 2020-07-25), 10-Q (reporting date: 2020-04-25), 10-Q (reporting date: 2020-01-25), 10-Q (reporting date: 2019-10-26), 10-K (reporting date: 2019-07-27), 10-Q (reporting date: 2019-04-27), 10-Q (reporting date: 2019-01-26), 10-Q (reporting date: 2018-10-27).
- Net Profit Margin
- The net profit margin displays a generally stable pattern from late 2018 to early 2023, fluctuating mostly in the range of approximately 20% to 23%. The margin shows periodic minor ups and downs but maintains a relatively consistent level during this period. However, beginning from around mid-2023, there is a noticeable decline, with the margin dropping from about 23.5% to under 18% by early 2025, indicating a downward trend in profitability relative to revenue in recent quarters.
- Asset Turnover
- Asset turnover ratios from late 2018 to early 2023 demonstrate moderate fluctuations around the 0.5 to 0.56 range, reflecting a relatively steady efficiency in utilizing assets to generate sales. In the period from early 2023 onwards, a significant decline occurs, dropping the ratio sharply from about 0.57 to around 0.43-0.46 by early 2025. This decline suggests a reduced efficiency in asset utilization over the most recent reported quarters.
- Financial Leverage
- Financial leverage exhibits a variable pattern throughout the examined period. Starting at 2.4 in late 2018, it rose gradually to nearly 2.9 during mid-2019, then decreased steadily to around 2.18 by early 2023. However, a marked increase is observed after this point, with leverage rising to nearly 2.74 by mid-2024, before tapering slightly to 2.61 by early 2025. This pattern indicates shifts in the company’s capital structure, with recent quarters showing increased reliance on debt or financial obligations relative to equity.
- Return on Equity (ROE)
- ROE demonstrates a generally declining trend over the entire period. From a high of roughly 34.6% in late 2018 and early 2019, there is a gradual decline with intermittent fluctuations down to about 25%-30% during 2020 and 2021. Post-2021, the return progressively decreases more sharply, reaching approximately 20% by early 2025. This diminishing ROE suggests a reduction in the overall profitability generated on shareholders' equity, potentially linked to declining profit margins and asset efficiency alongside changes in financial leverage.
Five-Component Disaggregation of ROE
Cisco Systems Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-04-26), 10-Q (reporting date: 2025-01-25), 10-Q (reporting date: 2024-10-26), 10-K (reporting date: 2024-07-27), 10-Q (reporting date: 2024-04-27), 10-Q (reporting date: 2024-01-27), 10-Q (reporting date: 2023-10-28), 10-K (reporting date: 2023-07-29), 10-Q (reporting date: 2023-04-29), 10-Q (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-K (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-Q (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-K (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-Q (reporting date: 2021-01-23), 10-Q (reporting date: 2020-10-24), 10-K (reporting date: 2020-07-25), 10-Q (reporting date: 2020-04-25), 10-Q (reporting date: 2020-01-25), 10-Q (reporting date: 2019-10-26), 10-K (reporting date: 2019-07-27), 10-Q (reporting date: 2019-04-27), 10-Q (reporting date: 2019-01-26), 10-Q (reporting date: 2018-10-27).
- Tax Burden
- The tax burden ratio remained relatively stable around 0.8 from October 2019 through early 2023, indicating a consistent proportion of pre-tax income retained after taxes. From early 2023 onward, there was a noticeable increase, peaking at approximately 0.94 by April 2025. This suggests a reduction in tax expenses relative to earnings, improving net income margins in the latest periods.
- Interest Burden
- The interest burden ratio displayed a slight upward trend from 0.94 in late 2019 to around 0.97 through most of 2021 and early 2022, suggesting slightly reduced interest expenses relative to earnings before interest and taxes. Beginning in early 2023, the ratio declined steadily to approximately 0.86 by mid-2024 and remained stable thereafter, signaling increasing interest costs or leverage effects impacting earnings.
- EBIT Margin
- EBIT margins showed a declining trend over the examined quarters. Initially around 29.7% in late 2019, the margin gradually decreased to about 26.7% by mid-2022 and further diminished more sharply to just above 21% by mid-2024. Despite some minor fluctuations, the overall pattern indicates reduced operating profitability over the studied period.
- Asset Turnover
- The asset turnover ratio demonstrated relative stability with minor variations between 0.5 and 0.56 from late 2019 to early 2023, reflecting consistent efficiency in generating sales from assets. However, from early 2023, the ratio fell significantly, dropping to approximately 0.43 by early 2024 with a slight recovery toward 0.46 by mid-2025. This decline indicates reduced effectiveness in asset utilization during recent periods.
- Financial Leverage
- Financial leverage showed an increasing trend initially, rising from 2.4 in late 2018 to nearly 2.9 by mid-2019, suggesting increased use of debt financing. Between late 2019 and early 2023, leverage ratios decreased to roughly 2.18, indicating reduced reliance on debt. However, starting in early 2023, leverage rebounded to about 2.74 by mid-2024 before declining slightly again toward 2.61 by mid-2025.
- Return on Equity (ROE)
- Return on equity exhibited a downward trajectory from a high of approximately 34.6% in late 2019 to around 27% by mid-2022, indicating declining overall profitability relative to shareholder equity. The ROE further declined more markedly from early 2023, reaching near 20% by mid-2024 and slightly rising to 21.3% by mid-2025. The decrease in ROE aligns with declining EBIT margins and asset turnover, partially offset by changes in financial leverage and tax burden.
Two-Component Disaggregation of ROA
Cisco Systems Inc., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2025-04-26), 10-Q (reporting date: 2025-01-25), 10-Q (reporting date: 2024-10-26), 10-K (reporting date: 2024-07-27), 10-Q (reporting date: 2024-04-27), 10-Q (reporting date: 2024-01-27), 10-Q (reporting date: 2023-10-28), 10-K (reporting date: 2023-07-29), 10-Q (reporting date: 2023-04-29), 10-Q (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-K (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-Q (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-K (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-Q (reporting date: 2021-01-23), 10-Q (reporting date: 2020-10-24), 10-K (reporting date: 2020-07-25), 10-Q (reporting date: 2020-04-25), 10-Q (reporting date: 2020-01-25), 10-Q (reporting date: 2019-10-26), 10-K (reporting date: 2019-07-27), 10-Q (reporting date: 2019-04-27), 10-Q (reporting date: 2019-01-26), 10-Q (reporting date: 2018-10-27).
- Net Profit Margin
- The net profit margin displays a generally stable pattern from October 2018 through early 2023, consistently oscillating around the low to mid-20% range. Initially, the margin hovers near 22-23%, indicating a healthy profitability level. However, starting from late 2023 and extending into 2025, there is a noticeable downward trend. The margin declines from 21.88% in the fourth quarter of 2023 to a low of 16.96% in early 2025, before showing a modest recovery to 17.6% by April 2025. This decline suggests some pressure on the company’s profitability during this later period.
- Asset Turnover
- Asset turnover exhibits moderate fluctuation over the observed timeframe. Between late 2018 and early 2023, the ratio remains relatively stable around 0.50 to 0.59, implying consistent efficiency in generating revenue from assets. Notably, asset turnover peaks at 0.59 in the first quarter of 2024 but then experiences a sharp reduction subsequently. By early to mid-2025, the ratio decreases to around 0.43-0.46, indicating a decline in asset utilization effectiveness during the latest periods.
- Return on Assets (ROA)
- Return on assets follows a trend largely similar to that of net profit margin and asset turnover, reflecting overall returns generated relative to total assets. From late 2018 through early 2023, ROA remains steady in the range of roughly 10.6% to 13.7%, indicating solid profitability and efficient asset usage. However, starting in late 2023, ROA undergoes a marked decline, falling from 13.29% in the fourth quarter of 2023 to a low near 7.5% by mid-2025. This decrease highlights reduced profitability and efficiency, aligning with observed downturns in both net margin and asset turnover.
Four-Component Disaggregation of ROA
Cisco Systems Inc., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2025-04-26), 10-Q (reporting date: 2025-01-25), 10-Q (reporting date: 2024-10-26), 10-K (reporting date: 2024-07-27), 10-Q (reporting date: 2024-04-27), 10-Q (reporting date: 2024-01-27), 10-Q (reporting date: 2023-10-28), 10-K (reporting date: 2023-07-29), 10-Q (reporting date: 2023-04-29), 10-Q (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-K (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-Q (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-K (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-Q (reporting date: 2021-01-23), 10-Q (reporting date: 2020-10-24), 10-K (reporting date: 2020-07-25), 10-Q (reporting date: 2020-04-25), 10-Q (reporting date: 2020-01-25), 10-Q (reporting date: 2019-10-26), 10-K (reporting date: 2019-07-27), 10-Q (reporting date: 2019-04-27), 10-Q (reporting date: 2019-01-26), 10-Q (reporting date: 2018-10-27).
- Tax Burden
- The tax burden ratio exhibited moderate fluctuations from 2019 to early 2023, generally maintaining a range between 0.75 and 0.85. Starting around 0.80 in late 2019, it experienced a gradual increase reaching approximately 0.94 by early 2025. This upward trend indicates a higher proportion of earnings retained after taxes over time.
- Interest Burden
- The interest burden ratio showed relative stability around 0.95 to 0.98 from late 2019 through early 2023, suggesting consistent control over interest expenses during this period. However, starting from early 2023, there was a noticeable decline down to 0.86 by early 2025, which may imply an increase in interest costs or changes in the debt structure affecting profitability.
- EBIT Margin
- The EBIT margin demonstrated a slight downward trend overall. Between late 2019 and early 2023, the margin fluctuated within the high twenties, mostly ranging from approximately 27% to 29%. Post early 2023, the margin declined more sharply, falling to about 21% by early 2025. This suggests a reduction in operating profitability relative to revenue in recent quarters.
- Asset Turnover
- Asset turnover ratios were generally stable between 0.50 and 0.59 from late 2019 to early 2023, indicating consistent efficiency in the use of assets to generate sales. However, a pronounced decrease occurred starting early 2023, with values dropping closer to 0.43–0.46 by early 2025. This decline could reflect reduced operational efficiency or changes in asset base relative to revenue generation.
- Return on Assets (ROA)
- ROA maintained a positive trend with moderate variability from late 2019 through early 2023, fluctuating roughly between 10.6% and 13.75%. After reaching a peak around early 2024, a significant decline is observed, with ROA decreasing to approximately 7.57% by early 2025. The decline in ROA corresponds with reductions in both operating profitability and asset turnover, indicating overall diminished effectiveness in generating profit from assets.
Disaggregation of Net Profit Margin
Cisco Systems Inc., decomposition of net profit margin ratio (quarterly data)
Based on: 10-Q (reporting date: 2025-04-26), 10-Q (reporting date: 2025-01-25), 10-Q (reporting date: 2024-10-26), 10-K (reporting date: 2024-07-27), 10-Q (reporting date: 2024-04-27), 10-Q (reporting date: 2024-01-27), 10-Q (reporting date: 2023-10-28), 10-K (reporting date: 2023-07-29), 10-Q (reporting date: 2023-04-29), 10-Q (reporting date: 2023-01-28), 10-Q (reporting date: 2022-10-29), 10-K (reporting date: 2022-07-30), 10-Q (reporting date: 2022-04-30), 10-Q (reporting date: 2022-01-29), 10-Q (reporting date: 2021-10-30), 10-K (reporting date: 2021-07-31), 10-Q (reporting date: 2021-05-01), 10-Q (reporting date: 2021-01-23), 10-Q (reporting date: 2020-10-24), 10-K (reporting date: 2020-07-25), 10-Q (reporting date: 2020-04-25), 10-Q (reporting date: 2020-01-25), 10-Q (reporting date: 2019-10-26), 10-K (reporting date: 2019-07-27), 10-Q (reporting date: 2019-04-27), 10-Q (reporting date: 2019-01-26), 10-Q (reporting date: 2018-10-27).
- Tax Burden Ratio
- The tax burden ratio shows a slight general upward trend over the analyzed periods. Starting around 0.80, it gradually increased, reaching peaks near 0.85 in the early 2023 quarters. Notably, the ratio exhibits a significant jump towards the final reporting quarters, approaching values above 0.90. This recent increase suggests a reduction in effective tax expenses relative to pre-tax income, enhancing net earnings stability amid other pressures.
- Interest Burden Ratio
- The interest burden ratio initially remains stable between approximately 0.94 and 0.98, indicating relatively consistent interest expense relative to earnings before interest and taxes. However, from early 2024 onwards, a notable declining trend is observed, with the ratio falling below 0.90 by the last quarters presented. This reflects rising interest expenses or financial costs impacting operating income, which could signal increased leverage or cost of borrowing pressures in recent periods.
- EBIT Margin
- EBIT margin displays a steady decline from roughly 29.7% in late 2018 and early 2019 to a low point near 21% in 2024. The margin experiences mild fluctuations but the overall direction is downward, indicating decreasing earnings from core operations relative to revenue. This contraction suggests either rising operating costs or competitive pressures eroding profitability at the operating level over the covered timeline.
- Net Profit Margin
- The net profit margin mirrors the declining trend seen in EBIT margin but shows temporary recoveries. It starts around 22.4% in late 2018, with intermittent dips toward 20%, then recoveries reaching above 23% in early 2023. However, later periods show a sharper drop to below 18%, even approaching 16% before a short rise to approximately 17.6%. This pattern indicates that despite some operational and tax efficiency, overall profitability after all expenses including financial costs has weakened, especially in the most recent quarters.
- Overall Insights
- The data presents a company experiencing increasing tax efficiency but facing rising interest expenses and eroding operating profitability margins. The combined effect results in a net profit margin that fluctuates but predominantly declines over the years covered. The recent marked decrease in both EBIT and net margins alongside the drop in interest burden ratio suggests growing financial challenges and a potentially tougher operating environment in the latest reporting periods.