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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
Costco Wholesale Corp., decomposition of ROE
ROE | = | ROA | × | Financial Leverage | |
---|---|---|---|---|---|
Aug 30, 2020 | = | × | |||
Sep 1, 2019 | = | × | |||
Sep 2, 2018 | = | × | |||
Sep 3, 2017 | = | × | |||
Aug 28, 2016 | = | × | |||
Aug 30, 2015 | = | × |
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 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).
The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in profitability measured by return on assets ratio (ROA).
Three-Component Disaggregation of ROE
Costco Wholesale Corp., decomposition of ROE
ROE | = | Net Profit Margin | × | Asset Turnover | × | Financial Leverage | |
---|---|---|---|---|---|---|---|
Aug 30, 2020 | = | × | × | ||||
Sep 1, 2019 | = | × | × | ||||
Sep 2, 2018 | = | × | × | ||||
Sep 3, 2017 | = | × | × | ||||
Aug 28, 2016 | = | × | × | ||||
Aug 30, 2015 | = | × | × |
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 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).
The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in efficiency measured by asset turnover ratio.
Five-Component Disaggregation of ROE
Costco Wholesale Corp., decomposition of ROE
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 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).
The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in efficiency measured by asset turnover ratio.
Two-Component Disaggregation of ROA
Costco Wholesale Corp., decomposition of ROA
ROA | = | Net Profit Margin | × | Asset Turnover | |
---|---|---|---|---|---|
Aug 30, 2020 | = | × | |||
Sep 1, 2019 | = | × | |||
Sep 2, 2018 | = | × | |||
Sep 3, 2017 | = | × | |||
Aug 28, 2016 | = | × | |||
Aug 30, 2015 | = | × |
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 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).
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
Costco Wholesale Corp., decomposition of ROA
ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
---|---|---|---|---|---|---|---|---|---|
Aug 30, 2020 | = | × | × | × | |||||
Sep 1, 2019 | = | × | × | × | |||||
Sep 2, 2018 | = | × | × | × | |||||
Sep 3, 2017 | = | × | × | × | |||||
Aug 28, 2016 | = | × | × | × | |||||
Aug 30, 2015 | = | × | × | × |
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 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).
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
Costco Wholesale Corp., decomposition of net profit margin ratio
Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
---|---|---|---|---|---|---|---|
Aug 30, 2020 | = | × | × | ||||
Sep 1, 2019 | = | × | × | ||||
Sep 2, 2018 | = | × | × | ||||
Sep 3, 2017 | = | × | × | ||||
Aug 28, 2016 | = | × | × | ||||
Aug 30, 2015 | = | × | × |
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 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).
The primary reason for the increase in net profit margin ratio over 2020 year is the increase in operating profitability measured by EBIT margin ratio.