AbbVie Inc. (ABBV)

DuPont Analysis: Decomposition of ROE

Difficulty: Beginner

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

Two-Component Disaggregation of ROE

AbbVie Inc., decomposition of ROE

	ROE	=	ROA	×	Leverage

Dec 31, 2017	104.16%		7.50%		13.89
Dec 31, 2016	128.41%		9.01%		14.26
Dec 31, 2015	130.39%		9.70%		13.45
Dec 31, 2014	101.84%		6.44%		15.81
Dec 31, 2013	91.90%		14.14%		6.50

Source: Based on data from AbbVie Inc. Annual Reports

The primary reason for the decrease in Return on Equity (ROE) over 2017 year is the decrease in profitability measured by Return on Assets (ROA).

Three-Component Disaggregation of ROE

AbbVie Inc., decomposition of ROE

	ROE	=	Net Profit Margin	×	Asset Turnover	×	Leverage

Dec 31, 2017	104.16%		18.82%		0.40		13.89
Dec 31, 2016	128.41%		23.22%		0.39		14.26
Dec 31, 2015	130.39%		22.50%		0.43		13.45
Dec 31, 2014	101.84%		8.89%		0.72		15.81
Dec 31, 2013	91.90%		21.97%		0.64		6.50

Source: Based on data from AbbVie Inc. Annual Reports

The primary reason for the decrease in Return on Equity (ROE) over 2017 year is the decrease in profitability measured by Net Profit Margin.

Five-Component Disaggregation of ROE

AbbVie Inc., decomposition of ROE

	ROE	=	Tax Burden	×	Interest Burden	×	EBIT Margin	×	Asset Turnover	×	Leverage

Dec 31, 2017	104.16%		0.69		0.87		31.46%		0.40		13.89
Dec 31, 2016	128.41%		0.76		0.88		34.84%		0.39		14.26
Dec 31, 2015	130.39%		0.77		0.90		32.21%		0.43		13.45
Dec 31, 2014	101.84%		0.75		0.85		14.02%		0.72		15.81
Dec 31, 2013	91.90%		0.77		0.95		29.97%		0.64		6.50

Source: Based on data from AbbVie Inc. Annual Reports

The primary reason for the decrease in Return on Equity (ROE) over 2017 year is the decrease in operating profitability measured by EBIT Margin.

Two-Way Decomposition of ROA

AbbVie Inc., decomposition of ROA

	ROA	=	Net Profit Margin	×	Asset Turnover

Dec 31, 2017	7.50%		18.82%		0.40
Dec 31, 2016	9.01%		23.22%		0.39
Dec 31, 2015	9.70%		22.50%		0.43
Dec 31, 2014	6.44%		8.89%		0.72
Dec 31, 2013	14.14%		21.97%		0.64

Source: Based on data from AbbVie Inc. Annual Reports

The primary reason for the decrease in Return on Assets (ROA) over 2017 year is the decrease in profitability measured by Net Profit Margin.

Four-Way Decomposition of ROA

AbbVie Inc., decomposition of ROA

	ROA	=	Tax Burden	×	Interest Burden	×	EBIT Margin	×	Asset Turnover

Dec 31, 2017	7.50%		0.69		0.87		31.46%		0.40
Dec 31, 2016	9.01%		0.76		0.88		34.84%		0.39
Dec 31, 2015	9.70%		0.77		0.90		32.21%		0.43
Dec 31, 2014	6.44%		0.75		0.85		14.02%		0.72
Dec 31, 2013	14.14%		0.77		0.95		29.97%		0.64

Source: Based on data from AbbVie Inc. Annual Reports

The primary reason for the decrease in Return on Assets (ROA) over 2017 year is the decrease in operating profitability measured by EBIT Margin.

Decomposition of Net Profit Margin

AbbVie Inc., decomposition of Net Profit Margin

	Net Profit Margin	=	Tax Burden	×	Interest Burden	×	EBIT Margin

Dec 31, 2017	18.82%		0.69		0.87		31.46%
Dec 31, 2016	23.22%		0.76		0.88		34.84%
Dec 31, 2015	22.50%		0.77		0.90		32.21%
Dec 31, 2014	8.89%		0.75		0.85		14.02%
Dec 31, 2013	21.97%		0.77		0.95		29.97%

Source: Based on data from AbbVie Inc. Annual Reports

The primary reason for the decrease in Net Profit Margin over 2017 year is the decrease in operating profitability measured by EBIT Margin.