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.
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- Statement of Comprehensive Income
- Cash Flow Statement
- Common-Size Income Statement
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2016
- Return on Assets (ROA) since 2016
- Total Asset Turnover since 2016
- Price to Earnings (P/E) since 2016
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Two-Component Disaggregation of ROE
Trade Desk Inc., decomposition of ROE (quarterly data)
Based on: 10-K (reporting date: 2025-12-31), 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 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).
The analysis reveals a clear upward trend in Return on Equity (ROE) over the observed period, accompanied by relatively stable Financial Leverage and fluctuating Return on Assets (ROA). The interplay between these components drives the overall ROE performance.
- Return on Equity (ROE)
- ROE demonstrates a significant increasing trend, starting at 6.10% in March 2022 and rising to 17.84% by December 2025. The initial period, through September 2022, exhibits volatility, including a negative value in September 2022 (-0.51%). However, a consistent upward trajectory is evident from March 2023 onwards, with accelerating growth in the latter half of 2024 and continuing into 2025. The most substantial gains are observed between September 2024 and December 2025.
- Return on Assets (ROA)
- ROA displays more fluctuation than ROE. It begins at 2.93% in March 2022, dips to a low of -0.25% in September 2022, and then generally increases. The growth in ROA appears to accelerate from March 2024, reaching 7.20% by December 2025. While positive, the ROA values are considerably lower than the corresponding ROE values, indicating the significant impact of financial leverage.
- Financial Leverage
- Financial Leverage remains relatively stable throughout the period, fluctuating within a narrow range. It starts at 2.08 in March 2022 and gradually increases to 2.48 by December 2025. The increase, while present, is moderate and suggests a consistent, though slightly expanding, use of debt financing. The peak in leverage in December 2025 coincides with the highest ROE, reinforcing the role of leverage in amplifying returns.
The increasing ROE is primarily driven by the combined effect of improving ROA and moderately increasing Financial Leverage. The negative ROA in September 2022 resulted in a corresponding negative ROE, highlighting the sensitivity of ROE to asset profitability. The consistent increase in leverage amplifies the impact of changes in ROA on ROE, contributing to the observed upward trend in overall profitability.
The period from March 2024 to December 2025 demonstrates the strongest performance, with both ROA and leverage contributing to substantial gains in ROE. This suggests a period of improved operational efficiency and effective capital structure management.
Three-Component Disaggregation of ROE
Trade Desk Inc., decomposition of ROE (quarterly data)
Based on: 10-K (reporting date: 2025-12-31), 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 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).
The three-component DuPont analysis reveals a notable upward trend in Return on Equity (ROE) over the observed period. This increase in ROE is driven by improvements in Net Profit Margin and Asset Turnover, partially offset by fluctuations in Financial Leverage. The period between March 31, 2022, and December 31, 2025, demonstrates a clear progression in profitability and efficiency, ultimately contributing to enhanced returns for equity holders.
- Net Profit Margin
- The Net Profit Margin exhibits significant volatility initially, declining to a negative value in September 2022 before demonstrating a consistent and substantial upward trajectory. Starting at 7.78% in March 2022, it experiences a low of -0.66% before reaching 16.08% in December 2024. This trend continues into 2025, stabilizing around 15-16%. This suggests improving cost management and/or pricing strategies over time.
- Asset Turnover
- Asset Turnover shows a more moderate, but consistent, improvement. Beginning at 0.38 in the first three quarters of 2022, it gradually increases, reaching 0.47 in the final two quarters of 2025. This indicates increasing efficiency in utilizing assets to generate revenue. The increase, while not dramatic, is sustained and contributes positively to the overall ROE improvement.
- Financial Leverage
- Financial Leverage demonstrates a less pronounced trend. It remains relatively stable between 2.05 and 2.10 for much of the period, with a noticeable increase beginning in December 2022, peaking at 2.48 in December 2025. This suggests an increasing reliance on debt financing. While leverage contributes to ROE, the increasing trend warrants monitoring to assess potential financial risk.
The combined effect of these three components is a substantial increase in ROE. Starting at 6.10% in March 2022, ROE rises to 17.84% by December 2025. The most significant gains occur between June 2023 and December 2025, coinciding with the period of strongest Net Profit Margin improvement. The interplay between improving profitability, asset utilization, and moderate increases in financial leverage has resulted in a considerable enhancement of shareholder returns.
The negative ROE observed in September 2022 is directly attributable to the negative Net Profit Margin during that quarter. The subsequent recovery and sustained growth in ROE highlight the importance of profitability as a key driver of overall financial performance.
Two-Component Disaggregation of ROA
Trade Desk Inc., decomposition of ROA (quarterly data)
Based on: 10-K (reporting date: 2025-12-31), 10-Q (reporting date: 2025-09-30), 10-Q (reporting date: 2025-06-30), 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 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).
The financial performance, as indicated by the two-component disaggregation of Return on Assets (ROA), demonstrates a clear upward trend over the observed period. This improvement is driven by concurrent positive movements in both Net Profit Margin and Asset Turnover. Initial periods exhibit lower profitability and efficiency, followed by consistent gains through the end of the observed timeframe.
- Net Profit Margin
- The Net Profit Margin experienced considerable volatility in the initial periods, beginning at 7.78% in March 2022, declining to a negative value of -0.66% by September 2022, and then recovering to 3.38% by December 2022. A consistent upward trajectory is then observed, reaching 16.08% in December 2024 before stabilizing around 15.57% to 15.31% in the final two quarters. This indicates a substantial improvement in the company’s ability to generate profit from each dollar of revenue.
- Asset Turnover
- Asset Turnover remained relatively stable between 0.38 and 0.41 for the first seven quarters. A noticeable increase begins in March 2024, rising to 0.44, and continues to climb, reaching 0.47 in both September and December 2025. This suggests increasing efficiency in utilizing assets to generate sales.
- Return on Assets (ROA)
- The ROA mirrors the improvements in its component ratios. Starting at 2.93% in March 2022, it dips to a low of -0.25% in September 2022. Subsequent quarters show a steady increase, culminating in 7.20% by December 2025. The consistent growth in ROA demonstrates the positive impact of both improved profitability and asset utilization.
The correlation between the increasing Net Profit Margin and Asset Turnover strongly suggests that the company is becoming more effective at both controlling costs and generating revenue from its asset base. The most significant improvements are observed from March 2024 onwards, indicating a potential shift in operational strategy or market conditions contributing to enhanced financial performance.