Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Texas Instruments Inc. (NASDAQ:TXN)

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

Texas Instruments Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Financial Leverage
Dec 31, 2019 56.33% = 27.84% × 2.02
Dec 31, 2018 62.04% = 32.56% × 1.91
Dec 31, 2017 35.62% = 20.87% × 1.71
Dec 31, 2016 34.33% = 21.88% × 1.57
Dec 31, 2015 30.02% = 18.40% × 1.63

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-24).

The primary reason for the decrease in return on equity ratio (ROE) over 2019 year is the decrease in profitability measured by return on assets ratio (ROA).

Three-Component Disaggregation of ROE

Texas Instruments Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2019 56.33% = 34.88% × 0.80 × 2.02
Dec 31, 2018 62.04% = 35.35% × 0.92 × 1.91
Dec 31, 2017 35.62% = 24.61% × 0.85 × 1.71
Dec 31, 2016 34.33% = 26.89% × 0.81 × 1.57
Dec 31, 2015 30.02% = 22.97% × 0.80 × 1.63

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-24).

The primary reason for the decrease in return on equity ratio (ROE) over 2019 year is the decrease in efficiency measured by asset turnover ratio.

Five-Component Disaggregation of ROE

Texas Instruments Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2019 56.33% = 0.88 × 0.97 × 41.01% × 0.80 × 2.02
Dec 31, 2018 62.04% = 0.83 × 0.98 × 43.15% × 0.92 × 1.91
Dec 31, 2017 35.62% = 0.61 × 0.99 × 41.16% × 0.85 × 1.71
Dec 31, 2016 34.33% = 0.73 × 0.98 × 37.47% × 0.81 × 1.57
Dec 31, 2015 30.02% = 0.71 × 0.98 × 33.12% × 0.80 × 1.63

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-24).

The primary reason for the decrease in return on equity ratio (ROE) over 2019 year is the decrease in efficiency measured by asset turnover ratio.

Two-Component Disaggregation of ROA

Texas Instruments Inc., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2019 27.84% = 34.88% × 0.80
Dec 31, 2018 32.56% = 35.35% × 0.92
Dec 31, 2017 20.87% = 24.61% × 0.85
Dec 31, 2016 21.88% = 26.89% × 0.81
Dec 31, 2015 18.40% = 22.97% × 0.80

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-24).

The primary reason for the decrease in return on assets ratio (ROA) over 2019 year is the decrease in asset turnover ratio.

Four-Component Disaggregation of ROA

Texas Instruments Inc., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2019 27.84% = 0.88 × 0.97 × 41.01% × 0.80
Dec 31, 2018 32.56% = 0.83 × 0.98 × 43.15% × 0.92
Dec 31, 2017 20.87% = 0.61 × 0.99 × 41.16% × 0.85
Dec 31, 2016 21.88% = 0.73 × 0.98 × 37.47% × 0.81
Dec 31, 2015 18.40% = 0.71 × 0.98 × 33.12% × 0.80

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-24).

The primary reason for the decrease in return on assets ratio (ROA) over 2019 year is the decrease in efficiency measured by asset turnover ratio.

Disaggregation of Net Profit Margin

Texas Instruments Inc., decomposition of net profit margin ratio

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2019 34.88% = 0.88 × 0.97 × 41.01%
Dec 31, 2018 35.35% = 0.83 × 0.98 × 43.15%
Dec 31, 2017 24.61% = 0.61 × 0.99 × 41.16%
Dec 31, 2016 26.89% = 0.73 × 0.98 × 37.47%
Dec 31, 2015 22.97% = 0.71 × 0.98 × 33.12%

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-24).

The primary reason for the decrease in net profit margin ratio over 2019 year is the decrease in operating profitability measured by EBIT margin ratio.