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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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Sales (P/S) since 2005
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Two-Component Disaggregation of ROE
United Airlines Holdings Inc., decomposition of ROE
| ROE | = | ROA | × | Financial Leverage | |
|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | |||
| Dec 31, 2023 | = | × | |||
| Dec 31, 2022 | = | × | |||
| Dec 31, 2021 | = | × | |||
| Dec 31, 2020 | = | × |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Return on Assets (ROA)
- The Return on Assets showed a notable improvement over the period. Initially, it was significantly negative at -11.87% in 2020, indicating poor asset efficiency or operational challenges. By 2021, the ROA improved substantially to -2.88%, moving closer to break-even. In 2022, the ROA turned positive at 1.09% and continued rising to 3.68% in 2023 and 4.25% in 2024. This upward trend suggests enhanced asset utilization and better profitability from the company’s asset base over the years.
- Financial Leverage
- The financial leverage ratio exhibited a consistent declining trend from 9.99 in 2020 to 5.84 in 2024. The peak was observed in 2021 at 13.56, representing a period of high reliance on debt or other liabilities relative to equity. The subsequent decrease indicates a reduction in leverage, suggesting the company has been deleveraging or improving its capital structure by reducing debt or increasing equity, leading to potentially lower financial risk.
- Return on Equity (ROE)
- The Return on Equity demonstrated considerable volatility but overall improvement during the five-year span. It started with a very negative figure of -118.61% in 2020, reflecting significant losses or equity erosion. Although still negative in 2021 at -39.05%, it improved markedly by 2022, turning positive at 10.69%. The upward momentum continued strongly in 2023 with 28.08%, before a slight decrease to 24.84% in 2024. These changes reveal a transition from heavy losses to robust shareholder returns, likely driven by improved operational performance and reduced financial leverage.
Three-Component Disaggregation of ROE
United Airlines Holdings Inc., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Financial Leverage | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Net Profit Margin
- The net profit margin demonstrated a significant recovery over the period under review. Beginning with a substantial negative margin of -46.04% in 2020, it improved drastically to -7.97% in 2021 and shifted to a positive margin of 1.64% in 2022. This upward trend continued, reaching 4.87% in 2023 and slightly increasing further to 5.52% in 2024, indicating enhanced profitability and operational efficiency.
- Asset Turnover
- There is a clear upward trajectory in asset turnover from 2020 to 2024. The ratio went from 0.26 in 2020 to 0.36 in 2021, and then experienced a marked increase to 0.67 in 2022. This improvement plateaued slightly in the following years, with 0.76 in 2023 and a marginal increase to 0.77 in 2024. This suggests a progressively better utilization of assets to generate revenue.
- Financial Leverage
- Financial leverage exhibited a consistent decline across the timeline. Starting from a high leverage ratio of 9.99 in 2020, it rose to 13.56 in 2021, signalling increased reliance on debt initially. However, from 2022 onwards, it decreased steadily to 9.77 in 2022, 7.63 in 2023, and further down to 5.84 in 2024, reflecting a deliberate reduction in leverage and potential improvement in financial risk management.
- Return on Equity (ROE)
- The return on equity mirrored the patterns observed in net profit margin and leverage. ROE was deeply negative at -118.61% in 2020, improving to -39.05% in 2021. By 2022, it turned positive to 10.69%, surged to 28.08% in 2023, and slightly decreased to 24.84% in 2024. The marked improvement in ROE over the years signals effective capitalization and improving shareholder returns, supported by rising profitability and reduced financial leverage.
Five-Component Disaggregation of ROE
United Airlines Holdings Inc., decomposition of ROE
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Tax Burden
- The tax burden ratio is available only from 2022 onward, showing relatively stable values around 0.74 to 0.77. This indicates that approximately 74% to 77% of pre-tax earnings are retained after taxes, reflecting consistency in tax expense relative to earnings.
- Interest Burden
- Interest burden improved significantly from 0.37 in 2022 to 0.75 in 2024, showing a progressive reduction in interest expenses relative to earnings before interest and taxes. This suggests better control over financing costs or a reduction in debt obligations impacting earnings.
- EBIT Margin
- The EBIT margin exhibited a major turnaround over the five-year period. Starting from a negative margin of -50.99% in 2020, it recovered sharply to -3.98% in 2021, then moved into positive territory with steady growth up to 9.76% in 2024. This indicates improving operational profitability and efficiency in core business activities.
- Asset Turnover
- Asset turnover increased consistently from 0.26 in 2020 to 0.77 in 2024. This upward trend reflects enhanced efficiency in using assets to generate revenue, suggesting better utilization of the company’s asset base over time.
- Financial Leverage
- Financial leverage decreased steadily from a high of 13.56 in 2021 to 5.84 in 2024. This decline implies a reduction in the reliance on debt financing relative to equity, potentially lowering the company's financial risk.
- Return on Equity (ROE)
- ROE experienced significant improvement, moving from deeply negative levels (-118.61% in 2020 and -39.05% in 2021) to positive returns from 2022 onward. It peaked at 28.08% in 2023 before slightly declining to 24.84% in 2024. This positive trend indicates increasing profitability and effectiveness in generating shareholder returns, supported by the improvements in operational performance and financial management.
Two-Component Disaggregation of ROA
United Airlines Holdings Inc., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | |||
| Dec 31, 2023 | = | × | |||
| Dec 31, 2022 | = | × | |||
| Dec 31, 2021 | = | × | |||
| Dec 31, 2020 | = | × |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Net Profit Margin
- The net profit margin showed a significant improvement over the analyzed period. Starting at a deeply negative value of -46.04% in 2020, it increased to -7.97% in 2021, indicating a reduction in losses. By 2022, the margin had turned positive at 1.64%, followed by steady growth to 4.87% in 2023 and 5.52% in 2024. This upward trend suggests a consistent recovery in profitability and better cost management or revenue growth.
- Asset Turnover
- Asset turnover displayed a strong upward trajectory, increasing from 0.26 in 2020 to 0.36 in 2021, and experiencing a sharp rise to 0.67 in 2022. This growth continued, though at a slower pace, reaching 0.76 in 2023 and slightly increasing to 0.77 in 2024. The rising asset turnover ratio reflects improved efficiency in utilizing assets to generate revenue, which is a positive sign of operational performance.
- Return on Assets (ROA)
- The return on assets moved from a negative -11.87% in 2020 up to -2.88% in 2021, indicating a significant reduction in asset-generated losses. In 2022, ROA became positive at 1.09%, followed by further increases to 3.68% in 2023 and 4.25% in 2024. This consistent improvement aligns with the trends observed in both net profit margin and asset turnover, suggesting enhanced overall profitability and asset utilization.
Four-Component Disaggregation of ROA
United Airlines Holdings Inc., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | × | |||||
| Dec 31, 2023 | = | × | × | × | |||||
| Dec 31, 2022 | = | × | × | × | |||||
| Dec 31, 2021 | = | × | × | × | |||||
| Dec 31, 2020 | = | × | × | × |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Tax Burden
- The tax burden ratio shows an improvement trend from 0.74 in 2022 to 0.77 in 2023, followed by a slight decrease to 0.76 in 2024. This indicates a relatively stable tax environment with a minor fluctuation in the effective tax rate over the last three years.
- Interest Burden
- The interest burden ratio exhibits a substantial increase from 0.37 in 2022 to 0.66 in 2023, with a further rise to 0.75 in 2024. This indicates a significant reduction in interest expenses relative to earnings before interest and taxes during this period, suggesting improved financial leverage or reduced interest costs.
- EBIT Margin
- The EBIT margin has shown a marked improvement, moving from a negative margin of -50.99% in 2020 and -3.98% in 2021 to a positive trend of 5.92% in 2022, increasing further to 9.61% in 2023 and stabilizing at 9.76% in 2024. This reflects a substantial recovery and enhanced operational profitability over five years.
- Asset Turnover
- There is a clear upward trend in asset turnover, increasing steadily from 0.26 in 2020 to 0.77 in 2024. This improvement indicates better utilization of assets to generate revenue, nearly tripling the efficiency over the period.
- Return on Assets (ROA)
- Return on assets has transitioned from negative values, -11.87% in 2020 and -2.88% in 2021, to positive growth beginning in 2022 at 1.09%, then rising to 3.68% in 2023 and 4.25% in 2024. This progression indicates a significant turnaround in asset profitability and overall financial health.
Disaggregation of Net Profit Margin
United Airlines Holdings Inc., decomposition of net profit margin ratio
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Tax Burden
- The tax burden ratio is only available from 2022 onwards, showing values of 0.74 in 2022, increasing slightly to 0.77 in 2023, before a minor decline to 0.76 in 2024. This indicates a relatively stable tax burden with a small upward trend followed by slight stabilization.
- Interest Burden
- The interest burden ratio exhibits a notable upward trend from 0.37 in 2022 to 0.66 in 2023, and further improving to 0.75 in 2024. This suggests a significant reduction in interest expenses relative to earnings before interest and taxes, reflecting an improving ability to cover interest obligations over the period.
- EBIT Margin
- The EBIT margin shows a considerable recovery trend. It starts with a deeply negative margin of -50.99% in 2020, sharply improving to -3.98% in 2021. From 2021 onwards, there is a positive turnaround with EBIT margins increasing to 5.92% in 2022, then further rising steadily to 9.61% in 2023, and slightly increasing again to 9.76% in 2024. This progression indicates an improving operational profitability over the five-year span.
- Net Profit Margin
- The net profit margin mirrors the improvement seen in the EBIT margin but remains at lower levels. Beginning with a negative -46.04% in 2020 and improving to -7.97% in 2021, the margin turns positive at 1.64% in 2022. It then continues to grow to 4.87% in 2023 and 5.52% in 2024. This trend shows a recovery in overall profitability after losses, with a positive trajectory of generating net profits in recent years.