Stock Analysis on Net
Stock Analysis on Net

Microsoft Corp. (NASDAQ:MSFT)

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin 

Microsoft Excel

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

Microsoft Excel
ROE = ROA × Financial Leverage
Jun 30, 2022 43.68% = 19.94% × 2.19
Jun 30, 2021 43.15% = 18.36% × 2.35
Jun 30, 2020 37.43% = 14.70% × 2.55
Jun 30, 2019 38.35% = 13.69% × 2.80
Jun 30, 2018 20.03% = 6.40% × 3.13
Jun 30, 2017 29.29% = 8.80% × 3.33

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

The primary reason for the increase in return on equity ratio (ROE) over 2022 year is the increase in profitability measured by return on assets ratio (ROA).

Three-Component Disaggregation of ROE

Microsoft Corp., decomposition of ROE

Microsoft Excel
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Jun 30, 2022 43.68% = 36.69% × 0.54 × 2.19
Jun 30, 2021 43.15% = 36.45% × 0.50 × 2.35
Jun 30, 2020 37.43% = 30.96% × 0.47 × 2.55
Jun 30, 2019 38.35% = 31.18% × 0.44 × 2.80
Jun 30, 2018 20.03% = 15.02% × 0.43 × 3.13
Jun 30, 2017 29.29% = 23.57% × 0.37 × 3.33

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

The primary reason for the increase in return on equity ratio (ROE) over 2022 year is the increase in efficiency measured by asset turnover ratio.

Five-Component Disaggregation of ROE

Microsoft Corp., decomposition of ROE

Microsoft Excel
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Jun 30, 2022 43.68% = 0.87 × 0.98 × 43.26% × 0.54 × 2.19
Jun 30, 2021 43.15% = 0.86 × 0.97 × 43.70% × 0.50 × 2.35
Jun 30, 2020 37.43% = 0.83 × 0.95 × 38.90% × 0.47 × 2.55
Jun 30, 2019 38.35% = 0.90 × 0.94 × 36.85% × 0.44 × 2.80
Jun 30, 2018 20.03% = 0.45 × 0.93 × 35.53% × 0.43 × 3.13
Jun 30, 2017 29.29% = 0.92 × 0.91 × 28.21% × 0.37 × 3.33

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

The primary reason for the increase in return on equity ratio (ROE) over 2022 year is the increase in efficiency measured by asset turnover ratio.

Two-Component Disaggregation of ROA

Microsoft Corp., decomposition of ROA

Microsoft Excel
ROA = Net Profit Margin × Asset Turnover
Jun 30, 2022 19.94% = 36.69% × 0.54
Jun 30, 2021 18.36% = 36.45% × 0.50
Jun 30, 2020 14.70% = 30.96% × 0.47
Jun 30, 2019 13.69% = 31.18% × 0.44
Jun 30, 2018 6.40% = 15.02% × 0.43
Jun 30, 2017 8.80% = 23.57% × 0.37

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

The primary reason for the increase in return on assets ratio (ROA) over 2022 year is the increase in asset turnover ratio.

Four-Component Disaggregation of ROA

Microsoft Corp., decomposition of ROA

Microsoft Excel
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Jun 30, 2022 19.94% = 0.87 × 0.98 × 43.26% × 0.54
Jun 30, 2021 18.36% = 0.86 × 0.97 × 43.70% × 0.50
Jun 30, 2020 14.70% = 0.83 × 0.95 × 38.90% × 0.47
Jun 30, 2019 13.69% = 0.90 × 0.94 × 36.85% × 0.44
Jun 30, 2018 6.40% = 0.45 × 0.93 × 35.53% × 0.43
Jun 30, 2017 8.80% = 0.92 × 0.91 × 28.21% × 0.37

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

The primary reason for the increase in return on assets ratio (ROA) over 2022 year is the increase in efficiency measured by asset turnover ratio.

Disaggregation of Net Profit Margin

Microsoft Corp., decomposition of net profit margin ratio

Microsoft Excel
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Jun 30, 2022 36.69% = 0.87 × 0.98 × 43.26%
Jun 30, 2021 36.45% = 0.86 × 0.97 × 43.70%
Jun 30, 2020 30.96% = 0.83 × 0.95 × 38.90%
Jun 30, 2019 31.18% = 0.90 × 0.94 × 36.85%
Jun 30, 2018 15.02% = 0.45 × 0.93 × 35.53%
Jun 30, 2017 23.57% = 0.92 × 0.91 × 28.21%

Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).

The primary reason for the increase in net profit margin ratio over 2022 year is the increase in effect of taxes measured by tax burden ratio.