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.
Two-Component Disaggregation of ROE
Monster Beverage Corp., decomposition of ROE (quarterly data)
Based on: 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), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Return on Assets (ROA)
- The Return on Assets exhibited a declining trend from early 2020 through late 2022, starting at 23.05% in March 2020 and decreasing steadily to a low of 14.37% by December 2022. Following this decline, there was a gradual recovery throughout 2023, with ROA increasing to 16.84% by December 2023, before slightly dipping to 16.59% in March 2024. This pattern indicates a period of diminishing asset efficiency followed by partial improvement in asset utilization.
- Financial Leverage
- Financial Leverage remained relatively stable over the observed period, fluctuating narrowly between 1.18 and 1.26. Starting at 1.26 in March 2020, it marginally decreased and stabilized around 1.18 to 1.20 from early 2022 onward. This suggests consistent use of debt relative to equity, implying no significant shifts in capital structure or risk profile during the analyzed timeframe.
- Return on Equity (ROE)
- Return on Equity followed a trend similar to ROA but at higher values, indicating effective use of financial leverage. It started at 29.07% in March 2020, then gradually declined to 16.96% in December 2022. Subsequently, ROE showed signs of recovery through 2023, reaching 19.89% in September 2023 and stabilizing around 19.53% in March 2024. The decrease in ROE aligns with the decline in ROA, while the recovery phase suggests improved profitability and equity efficiency more recently.
Three-Component Disaggregation of ROE
Monster Beverage Corp., decomposition of ROE (quarterly data)
Based on: 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), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Net Profit Margin
- The net profit margin showed an initial upward trend from 26.06% in March 2020, reaching a peak of 30.65% by December 2020. Following this peak, there was a steady decline through 2021 and 2022, bottoming out at 18.88% in December 2022. Beginning in early 2023, the margin exhibited signs of recovery, gradually increasing to 22.83% by March 2024.
- Asset Turnover
- Asset turnover exhibited a gradual decline from 0.88 in March 2020 to a low of 0.71 between December 2020 and March 2022, indicating decreasing efficiency in utilizing assets to generate sales. A modest improvement occurred in mid to late 2022 with values rising to 0.76, but by March 2024, the ratio slightly declined again to 0.73, suggesting relatively stable but subdued asset efficiency in recent quarters.
- Financial Leverage
- Financial leverage remained relatively stable throughout the period, starting at 1.26 in March 2020 and gradually decreasing to 1.18 by December 2022. The ratio remained close to this level through March 2024, reflecting a consistent use of debt relative to equity without significant changes in capital structure.
- Return on Equity (ROE)
- ROE declined from 29.07% in March 2020 to a low of 16.96% in December 2022, following a pattern similar to net profit margin and asset turnover, demonstrating a loss in overall profitability and efficiency in generating returns for shareholders. From 2023 onward, ROE showed moderate improvement, reaching 19.53% by March 2024, which may indicate early signs of operational or financial enhancements.
Two-Component Disaggregation of ROA
Monster Beverage Corp., decomposition of ROA (quarterly data)
Based on: 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), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Net Profit Margin
- The net profit margin exhibited an overall declining trend from March 2020 to December 2022, decreasing from 26.06% to a low of 18.88%. Notably, this decline was more pronounced from the end of 2020 through 2022. Starting in early 2023, the margin showed a recovery trend, rising steadily to reach approximately 22.83% by March 2024. Despite this improvement, the margin had not returned to the peak levels observed at the outset of the period.
- Asset Turnover
- Asset turnover demonstrated a gradual decline from 0.88 in March 2020 to a trough near 0.71 in the latter part of 2021 and early 2022. Following this decline, the ratio stabilized and exhibited minor fluctuations around 0.73 to 0.76 through 2023 and into early 2024. This suggests a modest decrease in asset efficiency over time, with some signs of stabilization towards the end of the observed period.
- Return on Assets (ROA)
- Return on assets followed a downward trajectory beginning in March 2020 at 23.05%, dropping significantly to around 14.37% by December 2022. This decline indicates reduced overall efficiency in generating profits from assets during this timeframe. However, similar to net profit margin, ROA showed a rebound starting in early 2023, improving steadily to approximately 16.59% by March 2024, although it remained below earlier levels.