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
Altria Group Inc., decomposition of ROE (quarterly data)
Based on: 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), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Return on Assets (ROA)
- The Return on Assets displays a notable positive trend over the analyzed periods. Initially, the ROA was negative in the first two quarters of 2020, indicating inefficient asset utilization or losses. Beginning in the third quarter of 2020, ROA turned positive and continued to improve steadily through to the end of 2024. The increase accelerated significantly from 2022 onward, culminating in values surpassing 29% by the third quarter of 2024. This upward trajectory suggests enhanced profitability and more effective asset deployment over time.
- Financial Leverage
- Financial leverage exhibited an increasing pattern during the first half of 2020, rising from 8.04 to a peak of 16.74 by the first quarter of 2021. This indicates a growing use of debt relative to equity in the capital structure during this interval. However, data beyond mid-2021 is missing, preventing a full assessment of leverage trends in the subsequent years. The high leverage figures early on may have influenced the other performance metrics during that timeframe.
- Return on Equity (ROE)
- Return on Equity experienced considerable volatility in the initial periods, starting with negative values in early 2020, signaling unprofitable shareholder returns. By late 2020 and early 2021, ROE exhibited dramatic spikes, reaching exceptionally high values above 130%. This unusual surge could be attributed to extraordinary items or changing leverage effects but remains unquantifiable without data continuity past mid-2021. The absence of later data restricts analysis of sustainability in equity returns.
- Overall Assessment
- The company demonstrates a marked recovery and improved profitability from 2020 through to 2024, as reflected by the steadily increasing ROA. Financial leverage increased sharply early on but lacks recent data for further evaluation. ROE outcomes show extreme variability in early periods but insufficient information thereafter. The improving ROA throughout the later quarters suggests enhanced operational efficiency and asset management despite earlier financial structure shifts. Continuous monitoring of leverage and equity returns would be beneficial for a comprehensive performance appraisal.
Three-Component Disaggregation of ROE
Altria Group Inc., decomposition of ROE (quarterly data)
Based on: 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), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Net Profit Margin
- The net profit margin showed a significant turnaround from negative values in early 2020, with -3.33% in March and -3.57% in June, to positive and steadily increasing margins in subsequent quarters. By December 2020, the margin rose sharply to 17.08%, maintaining a generally upward trajectory through 2021 and beyond. Notably, from late 2022 onward, the margin exhibited strong growth, reaching a peak of 42.82% by September 2024. This indicates considerable improvement in profitability and operational efficiency over the period.
- Asset Turnover
- Asset turnover experienced a gradual increase from 0.49 in Q1 2020 to a peak of 0.74 in September 2022. Although there was some fluctuation afterward, it stabilized around 0.67 to 0.70 by late 2023 and into 2024. This pattern highlights enhanced utilization of assets to generate revenue, with modest variability in the most recent quarters.
- Financial Leverage
- Financial leverage increased notably from 8.04 in March 2020 to a high of 16.74 in March 2021, reflecting increased reliance on debt or other liabilities relative to equity during that period. Data after mid-2021 is unavailable, hence the later trend cannot be assessed from the given information.
- Return on Equity (ROE)
- ROE demonstrated marked volatility and improvement over the early periods. It started as negative in the first half of 2020, with -13.16% in March and -16.07% in June. Sharply rebounding to 23.38% in September 2020, it surged extraordinarily to above 139% during 2021, peaking at 157.34% by December 2020. Data after September 2021 is missing, preventing further analysis. The early data suggests a remarkable recovery and high profitability relative to equity during 2020-2021.
Two-Component Disaggregation of ROA
Altria Group Inc., decomposition of ROA (quarterly data)
Based on: 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), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Net Profit Margin
- The net profit margin exhibited significant improvement over the analyzed periods. Initially, it was negative in early 2020, reaching lows of around -3.5%. From the second half of 2020 onward, the margin turned positive and showed a general upward trend with some fluctuations. Notable increases occurred toward the end of 2022 and throughout 2023, peaking above 42% in early and mid-2024. This indicates enhanced profitability and margin control across the time frame.
- Asset Turnover
- Asset turnover ratios demonstrated a modest but steady increase overall. Starting below 0.5 in the first quarter of 2020, it gradually rose to approximately 0.7 by the latter part of 2024. There were minor oscillations throughout the periods, but the general trend signifies improved efficiency in utilizing assets to generate revenue.
- Return on Assets (ROA)
- The return on assets closely mirrored the improvement observed in net profit margin. ROA began with negative figures near -1.8% in early 2020 but turned positive by late 2020 and showed consistent growth thereafter. It reached near 30% by the third quarter of 2024, indicating a stronger ability to generate profits from asset investments. The pattern highlights progressively effective asset use aligned with profit increases.