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.
Paying user area
Try for free
Microsoft Corp. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Price to Book Value (P/BV) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Microsoft Corp. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Two-Component Disaggregation of ROE
Microsoft Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-K (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-Q (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-K (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-Q (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30).
- Return on Assets (ROA)
- The Return on Assets exhibited an overall increasing trend from 15.78% in September 2020 to a peak around 21.03% in March 2022. Following this peak, ROA experienced a gradual decline, stabilizing in the range of approximately 16.45% to 18.5% in the most recent quarters. This pattern suggests an initial improvement in asset utilization and profitability, followed by a moderate decrease potentially indicating changes in asset efficiency or profit margins over time.
- Financial Leverage
- The financial leverage ratio demonstrated a consistent downward trajectory over the observed period, declining from 2.44 in September 2020 to around 1.75 by the latest quarters. This reduction implies a deliberate decrease in reliance on debt financing, indicating a stronger equity base relative to assets. The steady decrease in leverage may reflect a conservative financial strategy prioritizing risk management and balance sheet strengthening.
- Return on Equity (ROE)
- The Return on Equity followed a different trend compared to ROA. It increased from 38.49% in September 2020 to a high point at approximately 44.67% in September 2021, suggesting enhanced returns to shareholders during that period. After this peak, ROE gradually declined to 28.9% in the most recent observation. The decline in ROE aligns with the reduction in financial leverage, indicating that decreases in leverage are contributing to diminished equity returns as debt-driven amplification effects lessen.
- Overall Analysis
- The data reflect a phase of improving operational performance and profitability extending through early 2022, followed by a period marked by efforts to reduce financial leverage. The consequent lowering of financial leverage corresponds with diminishing returns on equity despite relatively stable asset returns. This suggests management may be prioritizing a more conservative capital structure at the expense of higher equity returns. The steadiness in ROA during the later periods signals stable core operations, while the shift in financial strategy reflects changing risk appetite or responses to broader economic conditions.
Three-Component Disaggregation of ROE
Microsoft Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-K (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-Q (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-K (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-Q (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30).
- Net Profit Margin
- The net profit margin demonstrates a generally positive trend from late 2020 to mid-2021, rising from approximately 32.29% to a peak of 38.51%. Following this peak, there is a moderate decline toward the end of 2022, where the margin falls to around 33.05%. Thereafter, a recovery is observed, with margins increasing gradually to near 36.27% by late 2023, before stabilizing mostly between 35% and 36% through to late 2025. This indicates an overall strong profitability with some fluctuations.
- Asset Turnover
- Asset turnover exhibits a rising trend from 0.49 in September 2020 to a high point around 0.56 in late 2021 and early 2022. After this period, asset turnover shows a gradual decline, moving down to approximately 0.46 by late 2025. This suggests a reduction in the efficiency of asset utilization over the longer term, following earlier improvement.
- Financial Leverage
- Financial leverage steadily decreases from about 2.44 in September 2020 to below 2.0 by early 2023, reflecting a progressive reduction in reliance on debt relative to equity. This downward trajectory continues moderately through 2024 and 2025, stabilizing near 1.75. The consistent decline indicates a conservative approach to financial risk and potentially improved balance sheet strength.
- Return on Equity (ROE)
- ROE shows an initial upward trajectory from 38.49% in late 2020, peaking around 44.67% by September 2021. Subsequently, it experiences a sustained downtrend, declining steadily to approximately 28.9% by late 2025. This decline, alongside asset turnover and financial leverage trends, signifies diminishing overall profitability on equity, possibly influenced by lower leverage and asset utilization.
Two-Component Disaggregation of ROA
Microsoft Corp., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2025-09-30), 10-K (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-Q (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-K (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-Q (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-K (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30).
- Net Profit Margin
- The net profit margin exhibited a generally upward trend from late 2020 through 2021, increasing from 32.29% in September 2020 to a peak of 38.51% in September 2021. After reaching this high point, the margin showed a moderate decline through the end of 2022, bottoming around 33.05% in December 2022. Beginning in early 2023, the margin rebounded steadily, rising again to reach approximately 36.27% by December 2023. The first three quarters of 2024 reflected a stabilization in the margin, maintaining levels around 35.7% to 36.2% with slight variations towards mid-2025, where it slightly declined to 35.71%. Overall, the margin indicates robust profitability with cyclical fluctuations but no extreme downturns.
- Asset Turnover
- Asset turnover showed an improving trend early in the data series, moving from 0.49 in September 2020 to a peak of 0.56 observed multiple times between March 2022 and December 2022. Post this peak, there was a noticeable decline in efficiency, with the ratio decreasing to 0.46 by September 2025. The downward trend after late 2022 suggests a gradual reduction in the company's efficiency in generating revenue from its assets. This decline could indicate either increased asset base without proportional revenue growth or reduced sales efficiency.
- Return on Assets (ROA)
- The return on assets mirrored a growth pattern similar to net profit margin in the initial periods, rising from 15.78% in September 2020 to a high of 21.03% in March 2022. Following this peak, ROA experienced a steady decline through the subsequent years, decreasing to 16.49% by September 2025. This downward drift after early 2022 signals a reduction in the company's overall profitability relative to its asset base. The trend suggests that the gains in asset use efficiency and profit margins early in the period were not sustained, potentially reflecting either margin pressures or expanded asset investment that has yet to translate into proportional income.