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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
Boeing Co., decomposition of ROE
| ROE | = | ROA | × | Leverage | |
|---|---|---|---|---|---|
| Dec 31, 2017 | % |
% |
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| Dec 31, 2016 | % |
% |
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| Dec 31, 2015 | % |
% |
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| Dec 31, 2014 | % |
% |
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| Dec 31, 2013 | % |
% |
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Source: Based on data from Boeing Co. Annual Reports
The primary reason for the increase in Return on Equity (ROE) over 2017 year is the increase in Financial Leverage.
Three-Component Disaggregation of ROE
Boeing Co., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Leverage | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2017 | % |
% |
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| Dec 31, 2016 | % |
% |
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| Dec 31, 2015 | % |
% |
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| Dec 31, 2014 | % |
% |
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| Dec 31, 2013 | % |
% |
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Source: Based on data from Boeing Co. Annual Reports
The primary reason for the increase in Return on Equity (ROE) over 2017 year is the increase in Financial Leverage.
Five-Component Disaggregation of ROE
Boeing Co., decomposition of ROE
| ROE | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | × | Leverage | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec 31, 2017 | % |
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% |
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| Dec 31, 2016 | % |
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% |
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| Dec 31, 2015 | % |
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% |
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| Dec 31, 2014 | % |
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% |
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| Dec 31, 2013 | % |
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% |
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|
Source: Based on data from Boeing Co. Annual Reports
The primary reason for the increase in Return on Equity (ROE) over 2017 year is the increase in Financial Leverage.
Two-Way Decomposition of ROA
Boeing Co., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Dec 31, 2017 | % |
% |
|
||
| Dec 31, 2016 | % |
% |
|
||
| Dec 31, 2015 | % |
% |
|
||
| Dec 31, 2014 | % |
% |
|
||
| Dec 31, 2013 | % |
% |
|
Source: Based on data from Boeing Co. Annual Reports
The primary reason for the increase in Return on Assets (ROA) over 2017 year is the increase in profitability measured by Net Profit Margin.
Four-Way Decomposition of ROA
Boeing Co., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Dec 31, 2017 | % |
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% |
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| Dec 31, 2016 | % |
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% |
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| Dec 31, 2015 | % |
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% |
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| Dec 31, 2014 | % |
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% |
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| Dec 31, 2013 | % |
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% |
|
Source: Based on data from Boeing Co. Annual Reports
The primary reason for the increase in Return on Assets (ROA) over 2017 year is the increase in operating profitability measured by EBIT Margin.
Decomposition of Net Profit Margin
Boeing Co., decomposition of Net Profit Margin
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2017 | % |
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% |
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| Dec 31, 2016 | % |
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% |
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| Dec 31, 2015 | % |
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% |
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| Dec 31, 2014 | % |
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% |
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| Dec 31, 2013 | % |
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% |
Source: Based on data from Boeing Co. Annual Reports
The primary reason for the increase in Net Profit Margin over 2017 year is the increase in operating profitability measured by EBIT Margin.
