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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- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Two-Component Disaggregation of ROE
Linde plc, decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 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).
- Return on Assets (ROA)
- The Return on Assets demonstrated a consistent upward trend over the observed periods. Starting at 3.42% in the first quarter of 2021, ROA increased steadily, reaching a peak of 8.25% by the third quarter of 2025. Notable acceleration in ROA is seen from early 2023 onwards, where values rose from approximately 5.59% to consistently above 7.5% in subsequent quarters. Minor fluctuations are present but the overall trajectory indicates improved efficiency in asset utilization over time.
- Financial Leverage
- Financial leverage showed a gradual but clear increase throughout the data set. Beginning at 1.84 times in the first quarter of 2021, leverage ratios rose incrementally, peaking at 2.23 times in the third quarter of 2025. This steady increase suggests growing reliance on debt or other financial obligations to finance assets, albeit at a controlled and progressive pace. The increase reflects a modest rise in financial risk profile over the period without abrupt changes.
- Return on Equity (ROE)
- Return on Equity exhibited a strong positive trend, rising from 6.29% in early 2021 to 18.37% by the third quarter of 2025. The growth in ROE aligns with increased financial leverage and improved asset returns, indicating effective use of equity and financial structure to enhance shareholder returns. The data highlights accelerated gains starting around 2023, with ROE values moving sharply upward from just over 11% to above 17% by 2025. Periodic incremental growth phases are evident, confirming sustained enhancement in profitability on equity capital.
- Overall Observations
- The trends across the three key financial ratios suggest a strategic focus on improving operational efficiency and profitability while gradually increasing leverage. Enhanced asset utilization (ROA) combined with increased financial leverage has driven a significant improvement in equity returns (ROE). The gradual leverage increase appears to be well-managed, supporting increased shareholder value without excessive risk increments. The data reflects a company that has progressively optimized its capital structure and operational performance over the multi-year period.
Three-Component Disaggregation of ROE
Linde plc, decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 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).
- Net Profit Margin
- The net profit margin shows a generally upward trend over the observed periods. Starting at 10.48% in March 2021, it experienced gradual increases with some fluctuations, reaching above 12% by the end of 2021. Notably, there was a significant increase beginning in early 2023, peaking at 21.17% in September 2025. This suggests improving profitability and effective cost management over time.
- Asset Turnover
- The asset turnover ratio indicates how efficiently the company uses its assets to generate revenue. The ratio improved from 0.33 in March 2021 to a peak of 0.45 in September 2022, reflecting enhanced operational efficiency. However, from late 2022 onward, the ratio stabilized in the range of 0.39 to 0.42, suggesting that asset utilization efficiency has plateaued in recent periods.
- Financial Leverage
- Financial leverage has shown a gradual increasing trend throughout the periods, starting from 1.84 in March 2021 and rising steadily to 2.23 by September 2025. This indicates a growing reliance on debt financing or higher asset-to-equity ratio, which could amplify returns but also implies increased financial risk.
- Return on Equity (ROE)
- ROE has increased significantly from 6.29% in March 2021 to 18.37% in September 2025. The rise aligns with improvements in net profit margin and financial leverage. This demonstrates that the company has been more effective in generating profits from shareholders’ equity, benefiting from both operational gains and leverage effects.
- Overall Insights
- The financial data indicates an improving profitability profile, as shown by rising net profit margins and ROE. Asset turnover efficiency improved initially but has stabilized recently, while the continuous increase in financial leverage suggests increased use of debt. The combination of these factors points to enhanced returns to equity holders but also implies a need to monitor risk associated with the rising leverage.
Two-Component Disaggregation of ROA
Linde plc, decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 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).
- Net Profit Margin
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The net profit margin demonstrates a generally upward trend across the observed periods. Starting at 10.48% in the first quarter of 2021, the margin increases steadily with some mild fluctuations through 2022. A notable inflection occurs from the first quarter of 2023, where the margin rises significantly from 13.46% and peaks at 21.17% by the third quarter of 2025. This indicates improving profitability relative to revenue over time, suggesting enhanced operational efficiency or cost management.
- Asset Turnover
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Asset turnover exhibits moderate variability throughout the timeframe. Initially, it rises gradually from 0.33 in early 2021 to a peak of 0.45 by the third quarter of 2022, reflecting increasing efficiency in using assets to generate sales. However, from late 2022 onward, the ratio stabilizes around 0.40 to 0.42 and slightly declines towards the end of the period, ending at 0.39 in the third quarter of 2025. This suggests that asset utilization efficiency plateaus and experiences a mild decrease in the latter years.
- Return on Assets (ROA)
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The return on assets shows consistent growth over the quarters. Starting from 3.42% in early 2021, it increases steadily with some variability, reaching above 5% by the end of 2021. From 2023 onward, ROA climbs more sharply, peaking at 8.25% in the third quarter of 2025. This trend signals improving profitability relative to the total asset base, reflecting either better income generation from assets or improved cost efficiency. The ROA growth aligns with the upward trend in net profit margin but outpaces the growth in asset turnover, indicating that profitability improvements are more influential than asset use efficiency in driving ROA.