Microsoft Excel LibreOffice Calc

DuPont Analysis: Decomposition of ROE

Difficulty: Beginner


Two-Component Disaggregation of ROE

Coca-Cola Co., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Leverage
Dec 31, 2017 7.31% 1.42% 5.15
Dec 31, 2016 28.30% 7.48% 3.78
Dec 31, 2015 28.77% 8.16% 3.53
Dec 31, 2014 23.41% 7.71% 3.04
Dec 31, 2013 25.88% 9.53% 2.71

Source: Based on data from Coca-Cola Co. 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

Coca-Cola Co., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Leverage
Dec 31, 2017 7.31% 3.52% 0.40 5.15
Dec 31, 2016 28.30% 15.59% 0.48 3.78
Dec 31, 2015 28.77% 16.60% 0.49 3.53
Dec 31, 2014 23.41% 15.43% 0.50 3.04
Dec 31, 2013 25.88% 18.32% 0.52 2.71

Source: Based on data from Coca-Cola Co. 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

Coca-Cola Co., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Leverage
Dec 31, 2017 7.31% 0.18 0.89 21.60% 0.40 5.15
Dec 31, 2016 28.30% 0.80 0.92 21.13% 0.48 3.78
Dec 31, 2015 28.77% 0.77 0.92 23.58% 0.49 3.53
Dec 31, 2014 23.41% 0.76 0.95 21.27% 0.50 3.04
Dec 31, 2013 25.88% 0.75 0.96 25.39% 0.52 2.71

Source: Based on data from Coca-Cola Co. Annual Reports

 

The primary reason for the decrease in Return on Equity (ROE) over 2017 year is the decrease in effect of taxes measured by Tax Burden.


Two-Way Decomposition of ROA

Coca-Cola Co., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2017 1.42% 3.52% 0.40
Dec 31, 2016 7.48% 15.59% 0.48
Dec 31, 2015 8.16% 16.60% 0.49
Dec 31, 2014 7.71% 15.43% 0.50
Dec 31, 2013 9.53% 18.32% 0.52

Source: Based on data from Coca-Cola Co. 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

Coca-Cola Co., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2017 1.42% 0.18 0.89 21.60% 0.40
Dec 31, 2016 7.48% 0.80 0.92 21.13% 0.48
Dec 31, 2015 8.16% 0.77 0.92 23.58% 0.49
Dec 31, 2014 7.71% 0.76 0.95 21.27% 0.50
Dec 31, 2013 9.53% 0.75 0.96 25.39% 0.52

Source: Based on data from Coca-Cola Co. Annual Reports

 

The primary reason for the decrease in Return on Assets (ROA) over 2017 year is the decrease in effect of taxes measured by Tax Burden.


Decomposition of Net Profit Margin

Coca-Cola Co., decomposition of Net Profit Margin

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2017 3.52% 0.18 0.89 21.60%
Dec 31, 2016 15.59% 0.80 0.92 21.13%
Dec 31, 2015 16.60% 0.77 0.92 23.58%
Dec 31, 2014 15.43% 0.76 0.95 21.27%
Dec 31, 2013 18.32% 0.75 0.96 25.39%

Source: Based on data from Coca-Cola Co. Annual Reports

 

The primary reason for the decrease in Net Profit Margin over 2017 year is the decrease in effect of taxes measured by Tax Burden.