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.
Two-Component Disaggregation of ROE
AbbVie Inc., decomposition of ROE (quarterly data)
Based on: 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), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31).
The analysis of the key financial ratios over the examined quarterly periods reveals distinct trends and shifts in the company’s financial performance and structure.
- Return on Assets (ROA)
- The ROA initially exhibits a strengthening trend, increasing from 3.43% in early 2021 to a peak around 9.49% by late 2022. This indicates a more efficient use of assets to generate profits during that period. However, starting in 2023, ROA begins a steady decline, reaching 1.78% by the third quarter of 2025. This downward trend highlights a decreasing effectiveness in asset utilization over the more recent quarters.
- Financial Leverage
- The financial leverage ratio shows some fluctuations initially, decreasing from approximately 11 in early 2021 to a low near 8 by the end of 2022, implying reduced reliance on debt financing relative to equity during that time. After that, leverage increases sharply from 2023 onwards, surging dramatically to very high levels, peaking at 95.89 in mid-2025 before data becomes unavailable. This sharp increase suggests a significant rise in debt relative to equity, indicating greater financial risk and potential vulnerability to market or interest rate changes.
- Return on Equity (ROE)
- ROE experiences a strong upward trend from 37.63% in early 2021 to a peak of 86.24% in mid-2022, indicating growing profitability and value generation for shareholders. Following this, ROE decreases somewhat through late 2022 but then fluctuates with a resurgence, reaching an exceptionally high value of 295.42% by mid-2025. The very high ROE levels in the later periods are largely driven by the substantial increase in financial leverage, amplifying returns on equity but also implying higher risk exposure.
In summary, the company demonstrated improving asset efficiency and profitability through 2021 and 2022, accompanied by moderate leverage. However, starting in 2023, a marked rise in financial leverage significantly influenced the financial metrics, pushing ROE to extraordinarily high levels even as ROA declined. This pattern suggests that profit generation increasingly depended on elevated debt levels, which could raise operational and financial risk going forward.
Three-Component Disaggregation of ROE
AbbVie Inc., decomposition of ROE (quarterly data)
Based on: 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), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31).
- Net Profit Margin
- The net profit margin exhibited a general upward trend from early 2021, increasing from approximately 10.28% in the first quarter of 2021 to a peak of 23.19% by the third quarter of 2022. Following this apex, the margin noticeably declined, reaching a low point around 4.00% by the third quarter of 2025. This pattern indicates a period of strong profitability followed by a significant contraction over the latter periods observed.
- Asset Turnover
- Asset turnover demonstrated a relatively stable and incremental improvement over the entire timeframe. Starting at 0.33 in the first quarter of 2021, the ratio rose gradually to 0.45 by the third quarter of 2025. This indicates a modest enhancement in the company’s efficiency in generating revenue from its assets.
- Financial Leverage
- Financial leverage showed considerable volatility and an overall increasing trend. It began at around 10.98 in early 2021, with some fluctuations through 2022 and 2023, including a notable rise from 13.00 in the last quarter of 2023 to 23.78 by the end of 2024. The ratio then surged sharply to 40.65 in the first quarter of 2025 and further to 95.89 in the second quarter of 2025. This suggests a growing dependence on debt financing or increased use of leverage, which substantially escalated in the most recent periods.
- Return on Equity (ROE)
- Return on equity experienced a similar volatile yet generally strong performance through the earlier periods, climbing from 37.63% in the first quarter of 2021 to a peak of 128.66% in the fourth quarter of 2024. The ratio then soared dramatically to 295.42% by mid-2025. The elevated ROE aligns with the escalating financial leverage, implying that the increased debt levels may be amplifying equity returns, albeit potentially increasing financial risk.
Two-Component Disaggregation of ROA
AbbVie Inc., decomposition of ROA (quarterly data)
Based on: 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), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31).
- Net Profit Margin
- The net profit margin exhibited an overall fluctuating pattern across the periods under review. It initially increased from 10.28% in March 2021 to a peak of 23.19% by September 2022, reflecting improving profitability. However, starting from December 2022, the margin began to decline steadily, falling to 4% by September 2025. This downward trend indicates a reduction in profitability relative to revenue in the latter periods.
- Asset Turnover
- The asset turnover ratio demonstrated a generally stable to modestly increasing trend. It started at 0.33 in March 2021, increased gradually to a high of 0.45 by September 2025. This suggests a gradual improvement in the efficiency with which the company utilized its assets to generate sales over time.
- Return on Assets (ROA)
- The ROA closely mirrored the net profit margin's pattern, beginning at 3.43% in March 2021, rising to a high of 9.49% in September 2022. Subsequently, ROA declined consistently to 1.78% by September 2025, indicating diminished overall profitability from the asset base in the later periods. The decline in ROA alongside the falling net profit margin implies challenges in maintaining asset efficiency and profitability concurrently.