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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
Costco Wholesale Corp., decomposition of ROE
Based on: 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14), 10-K (filing date: 2014-10-15), 10-K (filing date: 2013-10-16).
The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in Financial Leverage.
Three-Component Disaggregation of ROE
Costco Wholesale Corp., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Leverage | |
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| Sep 2, 2018 | |
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| Sep 3, 2017 | |
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| Aug 28, 2016 | |
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| Aug 30, 2015 | |
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| Aug 31, 2014 | |
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| Sep 1, 2013 | |
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Based on: 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14), 10-K (filing date: 2014-10-15), 10-K (filing date: 2013-10-16).
The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in Financial Leverage.
Five-Component Disaggregation of ROE
Costco Wholesale Corp., decomposition of ROE
| ROE | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | × | Leverage | |
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| Sep 2, 2018 | |
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| Sep 3, 2017 | |
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| Aug 28, 2016 | |
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| Aug 30, 2015 | |
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| Aug 31, 2014 | |
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| Sep 1, 2013 | |
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Based on: 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14), 10-K (filing date: 2014-10-15), 10-K (filing date: 2013-10-16).
The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in Financial Leverage.
Two-Way Decomposition of ROA
Costco Wholesale Corp., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Sep 2, 2018 | |
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| Sep 3, 2017 | |
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| Aug 28, 2016 | |
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| Aug 30, 2015 | |
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| Aug 31, 2014 | |
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| Sep 1, 2013 | |
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Based on: 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14), 10-K (filing date: 2014-10-15), 10-K (filing date: 2013-10-16).
The primary reason for the increase in Return on Assets (ROA) over 2018 year is the increase in profitability measured by Net Profit Margin.
Four-Way Decomposition of ROA
Costco Wholesale Corp., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Sep 2, 2018 | |
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| Sep 3, 2017 | |
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| Aug 28, 2016 | |
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| Aug 30, 2015 | |
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| Aug 31, 2014 | |
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| Sep 1, 2013 | |
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Based on: 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14), 10-K (filing date: 2014-10-15), 10-K (filing date: 2013-10-16).
The primary reason for the increase in Return on Assets (ROA) over 2018 year is the increase in effect of taxes measured by Tax Burden.
Decomposition of Net Profit Margin
Costco Wholesale Corp., decomposition of Net Profit Margin
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Sep 2, 2018 | |
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| Sep 3, 2017 | |
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| Aug 28, 2016 | |
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| Aug 30, 2015 | |
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| Aug 31, 2014 | |
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| Sep 1, 2013 | |
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Based on: 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14), 10-K (filing date: 2014-10-15), 10-K (filing date: 2013-10-16).
The primary reason for the increase in Net Profit Margin over 2018 year is the increase in effect of taxes measured by Tax Burden.
