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
CVS Health Corp., decomposition of ROE (quarterly data)
Based on: 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).
- Return on Assets (ROA)
- The ROA shows moderate fluctuations over the examined periods. Starting at 3.22% in March 2021, it rose slightly to a peak of 3.55% by June 2022 before sharply declining to 1.36% in September 2022. After this decline, ROA exhibited a recovery trend reaching 3.42% in September 2023, followed by a gradual decrease again, settling near 2.07% by March 2025. The pattern indicates cyclical performance with occasional dips and recoveries, but overall a downward trend from mid-2023 onwards.
- Financial Leverage
- Financial leverage remained relatively stable throughout the period, oscillating narrowly between approximately 3.06 and 3.44. It started at 3.24 in March 2021, experienced minor decreases and increases, peaking at 3.44 in June 2023, and slightly declining toward 3.32 by March 2025. This consistency suggests a steady use of debt to finance assets, without significant shifts in capital structure.
- Return on Equity (ROE)
- ROE closely mirrors the trends observed in ROA but with more pronounced volatility. Initially near 10.44% in March 2021, it peaked at about 10.86% through mid-2022 before tumbling to a low of 4.02% by June 2023. Post this decline, ROE rebounded strongly to reach 11.57% by September 2023. After this peak, it trended downward once more, finishing around 6.86% at the end of the data series. These variations suggest shifting profitability relative to shareholder equity, possibly influenced by changes in asset efficiency or leverage effects.
- Summary
- Overall, profitability as measured by ROA and ROE demonstrates cyclical fluctuations with peaks observed around mid-2022 and late 2023. The declines in late 2022 and mid-2023 indicate periods of reduced asset and equity efficiency. Financial leverage remained stable, implying that the observed profitability changes are likely driven more by operational performance than by capital structure adjustments. The gradual downward trend in recent periods merits attention for potential underlying operational challenges or market factors affecting returns.
Three-Component Disaggregation of ROE
CVS Health Corp., decomposition of ROE (quarterly data)
Based on: 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 exhibits fluctuations over the observed periods. Initially, it remains relatively stable around 2.6–2.7% through 2021 and early 2022. A notable decline occurs in the latter half of 2022, dropping sharply to approximately 1.0–1.3%. This decreased profitability continues into early 2023 before recovering moderately toward the end of 2023, reaching around 2.3–2.5%. However, starting in 2024, the margin declines steadily once more, reaching approximately 1.2–1.4% by the first quarter of 2025, indicating some challenges in sustaining higher profitability levels.
- Asset Turnover
- The asset turnover ratio demonstrates a consistent upward trend throughout the entire period. Beginning at 1.18 in early 2021, it gradually increases without interruption, reaching about 1.47 by the first quarter of 2025. This trend suggests enhanced efficiency in utilizing assets to generate sales over time.
- Financial Leverage
- Financial leverage shows some variability but remains within a narrow range between approximately 3.0 and 3.4. The ratio decreases slightly from 3.24 to near 3.1 during 2021, then fluctuates, peaking around the mid-3.4 levels in late 2022 and mid-2023. Toward early 2025, leverage gradually declines to around 3.3. Overall, leverage is relatively stable, indicating a consistent degree of reliance on debt or liabilities.
- Return on Equity (ROE)
- Return on equity follows a pattern largely correlated to the net profit margin but with more pronounced oscillations. ROE starts at about 10.4% in early 2021 and remains near this level through the first quarter of 2022. A sharp decline occurs in the second half of 2022, reaching lows near 4.5% to 5.8%. The ratio recovers strongly by late 2023, peaking again near 11.6%. Nevertheless, from 2024 onwards, ROE gradually falls to close to 6.9% by the beginning of 2025. This variation suggests fluctuations in profitability impacting shareholder returns, despite stable asset turnover and financial leverage ratios.
Five-Component Disaggregation of ROE
CVS Health Corp., decomposition of ROE (quarterly data)
Based on: 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).
- Tax Burden
- The tax burden ratio remained relatively stable over the examined periods, fluctuating slightly between 0.72 and 0.77. This indicates a consistent rate of tax expense relative to pre-tax income, with no significant upward or downward trend.
- Interest Burden
- The interest burden ratio showed more variability, starting around 0.78 and 0.8 in early 2021, dropping notably to 0.64 and 0.63 in the second half of 2022 and mid-2023, before recovering to a range between 0.7 and 0.82 in later periods. These fluctuations suggest changes in interest expenses relative to earnings before interest and taxes, potentially linked to varying debt levels or interest rates.
- EBIT Margin
- EBIT margin exhibited a general downward trend from above 4.7% in early 2021 to levels near 2.5% in late 2022 and early 2023. There was a brief recovery to around 4%, followed by another decline toward 2.7% by early 2025. This pattern indicates periods of margin compression, possibly from rising costs or competitive pressures, with intermittent attempts at margin improvement.
- Asset Turnover
- Asset turnover ratio demonstrated a consistent upward trend, increasing from approximately 1.18 in early 2021 to 1.47 by early 2025. This improvement suggests enhanced efficiency in using assets to generate revenue over time.
- Financial Leverage
- Financial leverage remained relatively steady, fluctuating in a narrow range between about 3.06 and 3.44. This stability indicates consistent use of debt financing without major shifts in capital structure.
- Return on Equity (ROE)
- ROE showed a pronounced volatility pattern. It initially stayed around 10% in 2021 and early 2022, then declined sharply to approximately 4.5-5.8% during late 2022 and early 2023. Following that, it improved sharply to surpass 11% before gradually decreasing again to around 6-7% by early 2025. This variability reflects combined effects of changes in profitability, asset efficiency, and financial leverage.
Two-Component Disaggregation of ROA
CVS Health Corp., decomposition of ROA (quarterly data)
Based on: 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 demonstrated a relatively stable trend around the 2.6% to 2.7% range throughout 2021 and early 2022. However, there was a marked decline starting in the third quarter of 2022, dropping sharply to approximately 1% and remaining low through mid-2023. Subsequently, the margin showed some recovery toward the end of 2023 and early 2024 but did not reach the earlier levels, stabilizing around 1.4% by the first quarter of 2025. This pattern suggests a period of reduced profitability starting in late 2022 with partial but incomplete recovery thereafter.
- Asset Turnover
- Asset turnover ratios illustrated a consistent upward trajectory over the entire period. Beginning at 1.18 in the first quarter of 2021, the ratio steadily increased to 1.28 by the first quarter of 2022 and continued to rise without interruption, reaching 1.47 in the first quarter of 2025. This continuous improvement indicates increasingly efficient use of assets to generate revenue over time.
- Return on Assets (ROA)
- The return on assets followed a pattern similar to that of net profit margin but with more pronounced fluctuations. ROA was relatively stable and rising slightly through 2021 and early 2022, peaking at around 3.55%. Starting in the third quarter of 2022, ROA experienced a significant dip to approximately 1.36%, followed by a period of low returns through mid-2023. A rebound occurred toward the end of 2023, with ROA climbing back above 3%, but it declined again during 2024, settling near 2% by the first quarter of 2025. This volatility in ROA reflects fluctuations in profitability relative to asset base, corresponding with trends observed in net profit margin.
Four-Component Disaggregation of ROA
CVS Health Corp., decomposition of ROA (quarterly data)
Based on: 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).
- Tax Burden
- The tax burden ratio exhibits relative stability over the examined periods, fluctuating slightly around the 0.74 to 0.77 range. A subtle decline is observed in the most recent quarters, reaching approximately 0.73 by the last period. This indicates a fairly consistent effective tax rate with minor variations.
- Interest Burden
- The interest burden ratio demonstrates more pronounced variability, particularly with a notable dip to around 0.64–0.63 in the mid-periods of 2022 and early 2023. This suggests periods of increased interest expense relative to earnings before interest and taxes. Towards the end of the timeline, there is a moderate recovery with values stabilizing between 0.68 and 0.78, indicating some improvement but still remaining below the initial values at the start of 2021.
- EBIT Margin
- The EBIT margin shows a declining trend from early 2021 (above 4.7%) into late 2022, with margins falling as low as approximately 1.9% to 2.4%. After the dip, a recovery is observed towards the end of 2023, with margins reaching up to about 4%. Nonetheless, this recovery is not fully sustained, as the margin again trends lower, settling around 2.7% by early 2025. The fluctuations indicate periods of operational challenge followed by partial improvement, yet overall the margin exhibits a downward tendency over the long term.
- Asset Turnover
- The asset turnover ratio reveals a steady, gradual improvement throughout the entire period. Starting at approximately 1.18 in early 2021, it increases consistently each quarter, peaking close to 1.47 by the first quarter of 2025. This suggests enhanced efficiency in utilizing assets to generate sales over time.
- Return on Assets (ROA)
- The ROA aligns with the fluctuations observed in EBIT margin and interest burden. It remains relatively strong in the first half of the timeframe, around 3.2% to 3.5%, before experiencing a significant decline in late 2022 and early 2023, dropping close to 1.2%. A recovery phase follows, with ROA improving again towards the end of 2023 to above 3%. However, by early 2025, ROA decreases once more to roughly 2%, indicating challenges in sustaining profitability relative to asset base in more recent quarters.
Disaggregation of Net Profit Margin
CVS Health Corp., decomposition of net profit margin ratio (quarterly data)
Based on: 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).
- Tax Burden
- The tax burden ratio exhibits relative stability over the observed periods, fluctuating marginally within a narrow range from 0.72 to 0.77. This indicates that the proportion of earnings retained after taxes remains fairly consistent, with slight periodic variations but no strong upward or downward trend.
- Interest Burden
- The interest burden ratio shows more pronounced variability. Initially stable around 0.78 to 0.82 during 2021 and early 2022, it declines noticeably in the third quarter of 2022 to 0.64, partially recovering afterwards but continuing to exhibit fluctuations between 0.63 and 0.82 through late 2023 and early 2024. In the most recent periods to 2025, a gradual downward trend emerges, reaching approximately 0.68 to 0.7. This suggests increased interest expenses or lower operating income relative to interest costs in certain quarters, impacting the company’s operating profitability.
- EBIT Margin
- The EBIT margin demonstrates a clear declining trend over the analyzed timeframe. Starting from a range of approximately 4.7% in early 2021, the margin diminishes substantially into the 2% range by late 2022, followed by some recovery to over 4% in late 2023. However, from 2024 onward, the margin again declines steadily, settling near 2.5% by the first quarter of 2025. This pattern reflects reduced operational profitability, with periods of partial rebound but an overall weakening profitability profile at the operating earnings level.
- Net Profit Margin
- Net profit margin follows a similar trajectory to EBIT margin, indicating erosion in overall profitability after accounting for all expenses, taxes, and interest. Margins start at roughly 2.7% in early 2021, decline sharply to near 1% in late 2022, then show a moderate rebound to approximately 2.5% by the end of 2023. Subsequently, the margin trends downward again, reaching around 1.3% to 1.4% by early 2025. The variation in net profit margin also corresponds with fluctuations in interest burden, suggesting sensitivity of net profitability to financing costs and operational efficiency.