Stock Analysis on Net
Stock Analysis on Net

3M Co. (NYSE:MMM)

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin 

Microsoft Excel LibreOffice Calc

Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.

Two-Component Disaggregation of ROE

3M Co., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Financial Leverage
Dec 31, 2021 39.35% = 12.58% × 3.13
Dec 31, 2020 41.84% = 11.37% × 3.68
Dec 31, 2019 45.41% = 10.23% × 4.44
Dec 31, 2018 54.60% = 14.65% × 3.73
Dec 31, 2017 42.01% = 12.79% × 3.29

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the decrease in return on equity ratio (ROE) over 2021 year is the decrease in financial leverage ratio.

Three-Component Disaggregation of ROE

3M Co., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2021 39.35% = 16.75% × 0.75 × 3.13
Dec 31, 2020 41.84% = 16.73% × 0.68 × 3.68
Dec 31, 2019 45.41% = 14.22% × 0.72 × 4.44
Dec 31, 2018 54.60% = 16.33% × 0.90 × 3.73
Dec 31, 2017 42.01% = 15.35% × 0.83 × 3.29

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the decrease in return on equity ratio (ROE) over 2021 year is the decrease in financial leverage ratio.

Five-Component Disaggregation of ROE

3M Co., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2021 39.35% = 0.82 × 0.94 × 21.76% × 0.75 × 3.13
Dec 31, 2020 41.84% = 0.80 × 0.93 × 22.47% × 0.68 × 3.68
Dec 31, 2019 45.41% = 0.80 × 0.93 × 19.13% × 0.72 × 4.44
Dec 31, 2018 54.60% = 0.77 × 0.95 × 22.39% × 0.90 × 3.73
Dec 31, 2017 42.01% = 0.64 × 0.96 × 24.83% × 0.83 × 3.29

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the decrease in return on equity ratio (ROE) over 2021 year is the decrease in financial leverage ratio.

Two-Component Disaggregation of ROA

3M Co., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2021 12.58% = 16.75% × 0.75
Dec 31, 2020 11.37% = 16.73% × 0.68
Dec 31, 2019 10.23% = 14.22% × 0.72
Dec 31, 2018 14.65% = 16.33% × 0.90
Dec 31, 2017 12.79% = 15.35% × 0.83

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2021 year is the increase in asset turnover ratio.

Four-Component Disaggregation of ROA

3M Co., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2021 12.58% = 0.82 × 0.94 × 21.76% × 0.75
Dec 31, 2020 11.37% = 0.80 × 0.93 × 22.47% × 0.68
Dec 31, 2019 10.23% = 0.80 × 0.93 × 19.13% × 0.72
Dec 31, 2018 14.65% = 0.77 × 0.95 × 22.39% × 0.90
Dec 31, 2017 12.79% = 0.64 × 0.96 × 24.83% × 0.83

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2021 year is the increase in efficiency measured by asset turnover ratio.

Disaggregation of Net Profit Margin

3M Co., decomposition of net profit margin ratio

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2021 16.75% = 0.82 × 0.94 × 21.76%
Dec 31, 2020 16.73% = 0.80 × 0.93 × 22.47%
Dec 31, 2019 14.22% = 0.80 × 0.93 × 19.13%
Dec 31, 2018 16.33% = 0.77 × 0.95 × 22.39%
Dec 31, 2017 15.35% = 0.64 × 0.96 × 24.83%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in net profit margin ratio over 2021 year is the increase in effect of taxes measured by tax burden ratio.