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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- Cash Flow Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Debt to Equity since 2008
- Price to Book Value (P/BV) since 2008
- Analysis of Debt
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Two-Component Disaggregation of ROE
Keurig Dr Pepper Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
The analysis of the quarterly financial indicators reveals several noteworthy trends over the observed periods.
- Return on Assets (ROA)
- The ROA exhibits a consistent upward trajectory throughout the quarters. Starting at 2.42% in March 2020, the ratio initially shows moderate increases with minor fluctuations until the end of 2020. Beginning in 2021, the ROA accelerates its growth, reaching a peak of 4.7% in the first quarter of 2022 before slightly declining to 4.23% in the following quarter. This pattern suggests improving operational efficiency and asset utilization over the observed timeframe.
- Financial Leverage
- The financial leverage ratio demonstrates a gradual decline across the reported periods. From 2.16 in March 2020, the ratio decreased steadily to 2.03 by mid-2022. This downward trend indicates a modest reduction in the company's reliance on debt financing relative to equity, implying a shift toward a more conservative capital structure.
- Return on Equity (ROE)
- The ROE follows a pronounced ascending trend, beginning at 5.21% in March 2020 and increasing consistently each quarter. The rate of increase intensifies particularly in late 2021, culminating at 9.43% in the first quarter of 2022 before a slight drop to 8.57% subsequently. This improvement reflects enhanced profitability from shareholders' equity, supported by the concurrent increase in ROA and the decrease in financial leverage.
Overall, the data indicates progressive improvement in profitability measures alongside a strategic reduction in financial leverage. The simultaneous rise in ROA and ROE suggests effective management of assets and equity, contributing to strengthened financial performance and shareholder value over the analyzed period.
Three-Component Disaggregation of ROE
Keurig Dr Pepper Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
The analysis of the quarterly financial ratios reveals several noteworthy trends over the observed periods.
- Net Profit Margin
- The net profit margin demonstrated a generally increasing trend over the quarters. Starting at 10.51% in the first quarter of 2020, it remained relatively stable through the middle of 2020 but began to rise significantly from early 2021, reaching a peak of 18.71% in the first quarter of 2022. There was a slight dip in the following quarter to 16.39%, though the margin remained substantially higher than earlier periods. This improvement indicates enhanced profitability and potentially better cost management or favorable revenue growth.
- Asset Turnover
- The asset turnover ratio showed a gradual increase, moving from 0.23 at the beginning of 2020 to 0.26 by mid-2022. Although the changes are modest, the consistent upward movement suggests improved efficiency in utilizing assets to generate sales over time, highlighting incremental operational improvements.
- Financial Leverage
- Financial leverage ratios decreased steadily from 2.16 in the first quarter of 2020 to approximately 2.01 by the first quarter of 2022, with a slight uptick to 2.03 in the following quarter. This downward trend indicates a gradual reduction in reliance on debt financing relative to equity, which may imply a strengthened balance sheet and a more conservative capital structure.
- Return on Equity (ROE)
- ROE exhibited a positive trend, increasing from 5.21% in the first quarter of 2020 to a high of 9.43% in the first quarter of 2022, before slightly declining to 8.57% in the subsequent quarter. The rise in ROE aligns with the improvements in net profit margin and asset turnover, demonstrating enhanced profitability and efficient use of equity capital. This trend reflects positively on the company's ability to generate returns for shareholders over the analyzed periods.
Five-Component Disaggregation of ROE
Keurig Dr Pepper Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Tax Burden
- The tax burden ratio demonstrates a steady increase over the analyzed periods, rising from 0.74 in early 2020 to 0.79 by mid-2022. This suggests a slight increase in the proportion of earnings retained after taxes.
- Interest Burden
- The interest burden ratio shows a consistent upward trend from 0.71 in the first quarter of 2020 to a peak of 0.85 in the last quarter of 2021, before slightly declining to 0.82 in mid-2022. This indicates an improvement in the company's earnings before tax relative to earnings before interest and tax, reflecting reduced interest expenses or improved earnings.
- EBIT Margin
- The EBIT margin exhibits a positive and notable growth throughout the period, starting at 19.79% in the first quarter of 2020 and reaching a high of 28.88% in the first quarter of 2022, followed by a slight decline to 25.34% in the second quarter of 2022. This indicates enhanced operational profitability, particularly strong in late 2021 and early 2022.
- Asset Turnover
- Asset turnover remains relatively stable with a gradual increase, moving from 0.23 at the beginning of 2020 to 0.26 by mid-2022. This suggests a modest improvement in the efficiency of asset utilization over time.
- Financial Leverage
- Financial leverage shows a steady decrease from 2.16 in early 2020 to a low of 2.01 in the first quarter of 2022, with a slight uptick to 2.03 by mid-2022. This trend points to a gradual reduction in reliance on debt financing or improved equity levels.
- Return on Equity (ROE)
- ROE demonstrates a clear upward trajectory from 5.21% in the first quarter of 2020 to a peak of 9.43% in the first quarter of 2022, followed by a decrease to 8.57% in mid-2022. The increase in ROE reflects enhanced profitability and financial efficiency, supported by improvements in margins and asset turnover despite decreasing financial leverage.
Two-Component Disaggregation of ROA
Keurig Dr Pepper Inc., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Net Profit Margin
- The net profit margin demonstrates a clear upward trend across the periods analyzed. Starting at 10.51% in the first quarter of 2020, it slightly fluctuates around 10.3% to 11.4% throughout 2020, before showing consistent growth in 2021 and 2022. The margin peaks at 18.71% in the first quarter of 2022, indicating improved profitability over time. A slight decline to 16.39% in the second quarter of 2022 suggests some short-term variability but overall the margin remains significantly higher compared to 2020 levels.
- Asset Turnover
- Asset turnover ratios remain relatively stable with a slow but steady increase. The ratio held steady at 0.23 through all quarters of 2020, then gradually increased to 0.26 by mid-2022. This indicates the company has been slightly improving its efficiency in using assets to generate revenue, although the overall changes are modest in magnitude.
- Return on Assets (ROA)
- Return on assets shows a consistent upward trend, rising from 2.42% in the first quarter of 2020 to a peak of 4.7% at the beginning of 2022. This improvement suggests enhanced profitability relative to the asset base over time. However, there is a noticeable decrease to 4.23% by the second quarter of 2022, indicating a minor dip in performance following the peak. Despite this, ROA more than doubled compared to the start of the period, reflecting significantly better asset utilization and profit generation.
Four-Component Disaggregation of ROA
Keurig Dr Pepper Inc., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Tax Burden
- The tax burden ratio exhibited a gradual upward trend over the observed periods, increasing from 0.74 in the first quarter of 2020 to 0.79 by the second quarter of 2022. This indicates a slightly higher proportion of earnings being retained after taxes over time.
- Interest Burden
- The interest burden ratio showed a steady improvement, rising from 0.71 in March 2020 to a peak of 0.85 in both the fourth quarter of 2021 and the first quarter of 2022, followed by a slight decline to 0.82 in June 2022. This suggests a reduction in interest expense relative to earnings before interest and taxes, enhancing profitability.
- EBIT Margin
- The EBIT margin displayed a meaningful upward trend throughout the period, increasing from 19.79% in the first quarter of 2020 to a peak of 28.88% in March 2022, before declining somewhat to 25.34% in June 2022. This growing margin reflects improved operational efficiency and profitability at the earnings before interest and taxes level.
- Asset Turnover
- Asset turnover remained relatively stable with a slight positive trend, moving incrementally from 0.23 in early 2020 to 0.26 by mid-2022. This suggests a marginal increase in the efficiency with which assets were used to generate sales.
- Return on Assets (ROA)
- The return on assets improved consistently over the timeframe, starting at 2.42% in March 2020 and reaching a high of 4.7% in the first quarter of 2022 before a modest decrease to 4.23% in June 2022. This increase is indicative of enhanced overall profitability relative to the company’s asset base.
Disaggregation of Net Profit Margin
Keurig Dr Pepper Inc., decomposition of net profit margin ratio (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
The analysis of the quarterly financial data reveals several notable trends in the company's profitability and cost management over the observed periods.
- Tax Burden
- The tax burden ratio shows a gradual increase from 0.74 in the first quarter of 2020 to a peak of 0.79 in the second quarter of 2022. This indicates a slight upward trend in the proportion of earnings retained after taxes, suggesting relatively stable tax efficiency with a modest improvement towards the end of the period.
- Interest Burden
- The interest burden ratio reflects an improvement in earnings before interest as a proportion of earnings before taxes. Starting at 0.71 in early 2020, it generally rises over the quarters, reaching 0.85 by the first quarter of 2022 before slightly declining to 0.82 in the second quarter. This increase indicates enhanced management of interest expenses or debt costs, contributing positively to pre-tax profitability.
- EBIT Margin
- The EBIT margin exhibits a steady upward trajectory from 19.79% in the first quarter of 2020 to a peak at 28.88% in the first quarter of 2022, followed by a slight decrease to 25.34% in the second quarter of 2022. This improvement reflects increased operating profitability, possibly due to higher revenue, better cost control, or operational efficiencies realized over the period.
- Net Profit Margin
- The net profit margin mirrors the positive trend seen in EBIT margin, expanding from 10.51% in early 2020 to a high of 18.71% in the first quarter of 2022, before decreasing to 16.39% by the subsequent quarter. This suggests enhanced overall profitability after accounting for all expenses, including taxes and interest, with robust growth sustained over multiple quarters.
Overall, the data indicates consistent strengthening of the company’s profitability margins alongside improved management of interest and tax burdens. The slight declines observed in the most recent quarter may warrant monitoring but do not detract from the general positive trend demonstrated throughout the majority of the period.