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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
Microsoft Corp., decomposition of ROE
Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).
The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in profitability measured by Return on Assets (ROA).
Three-Component Disaggregation of ROE
Microsoft Corp., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Leverage | |
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| Jun 30, 2018 | |
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Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).
The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in profitability measured by Net Profit Margin.
Five-Component Disaggregation of ROE
Microsoft Corp., decomposition of ROE
| ROE | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | × | Leverage | |
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| Jun 30, 2018 | |
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| Jun 30, 2014 | |
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Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).
The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in effect of taxes measured by Tax Burden.
Two-Way Decomposition of ROA
Microsoft Corp., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Jun 30, 2018 | |
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| Jun 30, 2017 | |
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| Jun 30, 2016 | |
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| Jun 30, 2015 | |
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| Jun 30, 2014 | |
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| Jun 30, 2013 | |
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Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).
The primary reason for the decrease in Return on Assets (ROA) over 2018 year is the decrease in profitability measured by Net Profit Margin.
Four-Way Decomposition of ROA
Microsoft Corp., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Jun 30, 2018 | |
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| Jun 30, 2017 | |
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| Jun 30, 2016 | |
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| Jun 30, 2015 | |
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| Jun 30, 2014 | |
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| Jun 30, 2013 | |
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Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).
The primary reason for the decrease in Return on Assets (ROA) over 2018 year is the decrease in effect of taxes measured by Tax Burden.
Decomposition of Net Profit Margin
Microsoft Corp., decomposition of Net Profit Margin
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Jun 30, 2018 | |
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| Jun 30, 2017 | |
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| Jun 30, 2016 | |
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| Jun 30, 2015 | |
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Based on: 10-K (filing date: 2018-08-03), 10-K (filing date: 2017-08-02), 10-K (filing date: 2016-07-28), 10-K (filing date: 2015-07-31), 10-K (filing date: 2014-07-31), 10-K (filing date: 2013-07-30).
The primary reason for the decrease in Net Profit Margin over 2018 year is the decrease in effect of taxes measured by Tax Burden.
