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DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Beginner level
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
| ROE | = | ROA | × | Financial Leverage | |
|---|---|---|---|---|---|
| Jun 30, 2020 | = | × | |||
| Jun 30, 2019 | = | × | |||
| Jun 30, 2018 | = | × | |||
| Jun 30, 2017 | = | × | |||
| Jun 30, 2016 | = | × | |||
| Jun 30, 2015 | = | × |
Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 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).
The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in financial leverage ratio.
Three-Component Disaggregation of ROE
Microsoft Corp., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Financial Leverage | |
|---|---|---|---|---|---|---|---|
| Jun 30, 2020 | = | × | × | ||||
| Jun 30, 2019 | = | × | × | ||||
| Jun 30, 2018 | = | × | × | ||||
| Jun 30, 2017 | = | × | × | ||||
| Jun 30, 2016 | = | × | × | ||||
| Jun 30, 2015 | = | × | × |
Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 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).
The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in financial leverage ratio.
Five-Component Disaggregation of ROE
Microsoft Corp., decomposition of ROE
Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 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).
The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in financial leverage ratio.
Two-Component Disaggregation of ROA
Microsoft Corp., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Jun 30, 2020 | = | × | |||
| Jun 30, 2019 | = | × | |||
| Jun 30, 2018 | = | × | |||
| Jun 30, 2017 | = | × | |||
| Jun 30, 2016 | = | × | |||
| Jun 30, 2015 | = | × |
Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 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).
The primary reason for the increase in return on assets ratio (ROA) over 2020 year is the increase in asset turnover ratio.
Four-Component Disaggregation of ROA
Microsoft Corp., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Jun 30, 2020 | = | × | × | × | |||||
| Jun 30, 2019 | = | × | × | × | |||||
| Jun 30, 2018 | = | × | × | × | |||||
| Jun 30, 2017 | = | × | × | × | |||||
| Jun 30, 2016 | = | × | × | × | |||||
| Jun 30, 2015 | = | × | × | × |
Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 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).
The primary reason for the increase in return on assets ratio (ROA) over 2020 year is the increase in efficiency measured by asset turnover ratio.
Disaggregation of Net Profit Margin
Microsoft Corp., decomposition of net profit margin ratio
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Jun 30, 2020 | = | × | × | ||||
| Jun 30, 2019 | = | × | × | ||||
| Jun 30, 2018 | = | × | × | ||||
| Jun 30, 2017 | = | × | × | ||||
| Jun 30, 2016 | = | × | × | ||||
| Jun 30, 2015 | = | × | × |
Based on: 10-K (filing date: 2020-07-31), 10-K (filing date: 2019-08-01), 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).
The primary reason for the decrease in net profit margin ratio over 2020 year is the decrease in effect of taxes measured by tax burden ratio.