DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
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- Statement of Comprehensive Income
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
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Two-Component Disaggregation of ROE
PepsiCo Inc., decomposition of ROE
| ROE | = | ROA | × | Financial Leverage | |
|---|---|---|---|---|---|
| Dec 28, 2024 | = | × | |||
| Dec 30, 2023 | = | × | |||
| Dec 31, 2022 | = | × | |||
| Dec 25, 2021 | = | × | |||
| Dec 26, 2020 | = | × |
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
- Return on Assets (ROA)
- The Return on Assets exhibits a generally positive trend over the observed periods. Starting at 7.66% in late 2020, it increased to 8.25% in 2021 and peaked at 9.67% in 2022. Although there was a slight decline to 9.03% in 2023, the metric rose again to 9.63% in 2024. This indicates an overall improvement in asset efficiency in generating profits, with minor fluctuations.
- Financial Leverage
- Financial leverage decreased consistently from 6.91 in 2020 to 5.38 in 2022, suggesting a reduction in the company's reliance on debt relative to equity. However, from 2022 onwards, leverage levels stabilized somewhat, with a slight increase to 5.43 in 2023 and 5.51 in 2024. This pattern implies a cautious approach to leveraging after the initial reduction phase.
- Return on Equity (ROE)
- The Return on Equity displays moderate variability during the period. It declined from 52.92% in 2020 to 47.48% in 2021, followed by an increase to 51.96% in 2022. A subsequent decrease occurred in 2023 to 49.04%, with a rebound to the highest value in the observed span, 53.09%, in 2024. The fluctuations suggest changes in profitability and/or capital structure impacts, though the overall levels remain robust.
- Summary
- The financial data reflects an improvement in operational efficiency as evidenced by rising ROA. Concurrently, the company has lessened its financial leverage over time but has slightly increased it in recent years, possibly to optimize capital structure. Despite some fluctuations, ROE remains high, indicating strong returns for shareholders. The interplay between these metrics points to a balanced management of assets and capital structure aimed at sustaining profitability and financial strength.
Three-Component Disaggregation of ROE
PepsiCo Inc., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Financial Leverage | |
|---|---|---|---|---|---|---|---|
| Dec 28, 2024 | = | × | × | ||||
| Dec 30, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 25, 2021 | = | × | × | ||||
| Dec 26, 2020 | = | × | × |
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
- Net Profit Margin
- Over the observed period, net profit margin demonstrated a generally stable pattern, fluctuating moderately around the 10% mark. It decreased slightly from 10.12% in 2020 to 9.59% in 2021, then increased to 10.31% in 2022. A minor decline followed in 2023 to 9.92%, before recovering to the highest value of 10.43% in 2024, indicating a resilient profitability level over the years.
- Asset Turnover
- The asset turnover ratio exhibited a consistent upward trend from 0.76 in 2020 to 0.94 in 2022, reflecting improved efficiency in using assets to generate revenue. Although there was a slight dip to 0.91 in 2023, the ratio recovered to 0.92 in 2024, maintaining a relatively higher efficiency compared to the outset of the period.
- Financial Leverage
- Financial leverage showed a declining trend from 6.91 in 2020 to 5.38 in 2022, suggesting a reduction in the use of debt relative to equity. This reduction slowed and slightly reversed from 2023 onward, with values increasing moderately to 5.43 and 5.51 in 2023 and 2024 respectively, indicating a cautious approach towards leveraging in recent years.
- Return on Equity (ROE)
- The return on equity fluctuated but remained notably high throughout the period. Starting at 52.92% in 2020, it declined to 47.48% in 2021, rebounded to 51.96% in 2022, then dipped slightly to 49.04% in 2023, before reaching a peak at 53.09% in 2024. These variations correspond with changes in profitability, efficiency, and leverage, reflecting strong overall returns to shareholders.
Five-Component Disaggregation of ROE
PepsiCo Inc., decomposition of ROE
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
- Tax Burden
- The tax burden ratio shows moderate fluctuations over the observed period, starting at 0.79 in 2020, slightly decreasing to 0.78 in 2021, then rising to 0.84 in 2022 before stabilizing around 0.80-0.81 in 2023 and 2024. This indicates some variability but overall a relatively stable proportion of earnings retained after tax.
- Interest Burden
- The interest burden ratio indicates a minor downward trend from 0.88 in 2020 to 0.83 in 2021, followed by a recovery to 0.90 in 2022 and a slight decrease thereafter, settling at 0.88 by 2024. These fluctuations suggest periodic changes in interest expenses relative to earnings before interest and taxes, but maintaining an overall strong capacity to cover interest obligations.
- EBIT Margin
- The EBIT margin percentage experienced a slight decline from 14.59% in 2020 to 13.61% in 2022, reflecting a temporary reduction in operating profitability. Subsequently, it improved to 14.7% by 2024, indicating a recovery in operational efficiency and profitability by the end of the period.
- Asset Turnover
- Asset turnover ratio demonstrates a consistent upward trend from 0.76 in 2020 to 0.94 in 2022, followed by a minor dip to 0.91 in 2023 and a slight increase to 0.92 in 2024. This pattern reflects an overall improvement in the effectiveness of asset utilization to generate sales over the years.
- Financial Leverage
- Financial leverage shows a decreasing trend from 6.91 in 2020 to 5.38 in 2022, indicating a reduction in the use of debt relative to equity. After 2022, there is a slight increase, reaching 5.51 by 2024, suggesting a modest rise in leverage but still at a lower level compared to the initial year.
- Return on Equity (ROE)
- ROE exhibits variability with a reduction from 52.92% in 2020 to 47.48% in 2021, followed by an increase to 51.96% in 2022. Although it dipped slightly to 49.04% in 2023, it again rose to 53.09% in 2024. This overall pattern denotes a strong but fluctuating ability to generate shareholder returns, with a tendency towards recovery and growth in the final period observed.
Two-Component Disaggregation of ROA
PepsiCo Inc., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Dec 28, 2024 | = | × | |||
| Dec 30, 2023 | = | × | |||
| Dec 31, 2022 | = | × | |||
| Dec 25, 2021 | = | × | |||
| Dec 26, 2020 | = | × |
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
- Net Profit Margin
- The net profit margin experienced minor fluctuations across the periods analyzed. Starting at 10.12% in 2020, it decreased slightly to 9.59% in 2021 before rising again to 10.31% in 2022. It then declined to 9.92% in 2023 but recovered to 10.43% in 2024. Overall, the margin remained relatively stable, generally hovering around the 10% mark, which indicates consistent profitability relative to revenue.
- Asset Turnover
- Asset turnover showed a clear upward trend from 0.76 in 2020 to 0.94 in 2022, indicating improved efficiency in using assets to generate sales. There was a slight decline to 0.91 in 2023, followed by a marginal increase to 0.92 in 2024. The overall pattern suggests enhanced asset utilization over the period, contributing positively to operational efficiency.
- Return on Assets (ROA)
- ROA mirrored the trends in both net profit margin and asset turnover, increasing from 7.66% in 2020 to a peak of 9.67% in 2022. After a decrease to 9.03% in 2023, it again rose to 9.63% in 2024. This indicates that the company effectively converted its asset base into net earnings, with an improving return until 2022, a slight dip thereafter, and a subsequent recovery.
Four-Component Disaggregation of ROA
PepsiCo Inc., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Dec 28, 2024 | = | × | × | × | |||||
| Dec 30, 2023 | = | × | × | × | |||||
| Dec 31, 2022 | = | × | × | × | |||||
| Dec 25, 2021 | = | × | × | × | |||||
| Dec 26, 2020 | = | × | × | × |
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
- Tax Burden
- The tax burden ratio exhibited minor fluctuations during the period, starting at 0.79 in 2020 and ending slightly higher at 0.81 in 2024. A notable peak occurred in 2022 at 0.84, followed by a moderate decline and stabilization around 0.80-0.81 in subsequent years.
- Interest Burden
- The interest burden ratio showed some variability, ranging from a low of 0.83 in 2021 to a high of 0.90 in 2022. The ratio tended to decline after this peak, finishing at 0.88 in 2024, indicating some fluctuations in interest expenses relative to earnings over the period.
- EBIT Margin
- The EBIT margin demonstrated relative stability with slight variations, starting at 14.59% in 2020, experiencing a decrease to 13.61% in 2022, and recovering towards 14.7% by the end of 2024. This suggests operational profitability remained fairly consistent, with modest improvements in the latter years.
- Asset Turnover
- Asset turnover showed a clear upward trend over the observed years, improving from 0.76 in 2020 to 0.92 in 2024. This increase indicates more efficient utilization of assets in generating sales, peaking in 2022 at 0.94 before stabilizing slightly below that level.
- Return on Assets (ROA)
- ROA experienced a steady increase overall, beginning at 7.66% in 2020 and reaching 9.63% in 2024. The highest point was seen in 2022 at 9.67%, with a slight dip the following year. This trend reflects improving effectiveness in generating profit from the asset base across the analyzed period.
Disaggregation of Net Profit Margin
PepsiCo Inc., decomposition of net profit margin ratio
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Dec 28, 2024 | = | × | × | ||||
| Dec 30, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 25, 2021 | = | × | × | ||||
| Dec 26, 2020 | = | × | × |
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
- Tax Burden
- The tax burden ratio exhibited some fluctuations over the analyzed period. It decreased slightly from 0.79 in 2020 to 0.78 in 2021, then increased notably to 0.84 in 2022. Following this peak, it decreased to 0.80 in 2023 and experienced a minor rise to 0.81 in 2024. Overall, the tax burden has demonstrated moderate volatility with a tendency to revert close to its initial levels by the end of the period.
- Interest Burden
- The interest burden ratio declined from 0.88 in 2020 to 0.83 in 2021, indicating increased interest expenses or lower earnings before interest and taxes during that year. Subsequently, it improved to 0.90 in 2022 and slightly decreased thereafter, maintaining a relatively stable level around 0.88 through 2024. This pattern suggests an initial worsening followed by a recovery and stabilization in the company’s ability to cover interest expenses.
- EBIT Margin
- The EBIT margin showed a generally stable trend, starting at 14.59% in 2020 and slightly increasing to 14.78% in 2021. In 2022, it dropped to 13.61%, representing the lowest point in the period, but recovered to 13.96% in 2023 and further improved to 14.70% in 2024. This indicates a temporary compression in operating profitability in 2022, followed by a consistent rebound nearing initial levels.
- Net Profit Margin
- The net profit margin displayed more variation, beginning at 10.12% in 2020 and decreasing to 9.59% in 2021, marking the lowest margin in the timeframe. It then recovered to 10.31% in 2022, dipped again to 9.92% in 2023, and increased to 10.43% by 2024. These fluctuations suggest variability in overall profitability possibly influenced by factors affecting both operating performance and non-operating expenses.