Danaher Corp. (DHR)

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

Danaher Corp., decomposition of ROE

	ROE	=	ROA	×	Leverage

Dec 31, 2017	9.45%		5.34%		1.77
Dec 31, 2016	11.10%		5.64%		1.97
Dec 31, 2015	14.17%		6.96%		2.04
Dec 31, 2014	11.11%		7.02%		1.58
Dec 31, 2013	12.04%		7.77%		1.55

Source: Based on data from Danaher Corp. Annual Reports

The primary reason for the decrease in Return on Equity (ROE) over 2017 year is the decrease in Financial Leverage.

Three-Component Disaggregation of ROE

Danaher Corp., decomposition of ROE

	ROE	=	Net Profit Margin	×	Asset Turnover	×	Leverage

Dec 31, 2017	9.45%		13.60%		0.39		1.77
Dec 31, 2016	11.10%		15.13%		0.37		1.97
Dec 31, 2015	14.17%		16.33%		0.43		2.04
Dec 31, 2014	11.11%		13.05%		0.54		1.58
Dec 31, 2013	12.04%		14.10%		0.55		1.55

Source: Based on data from Danaher Corp. Annual Reports

The primary reason for the decrease in Return on Equity (ROE) over 2017 year is the decrease in Financial Leverage.

Five-Component Disaggregation of ROE

Danaher Corp., decomposition of ROE

	ROE	=	Tax Burden	×	Interest Burden	×	EBIT Margin	×	Asset Turnover	×	Leverage

Dec 31, 2017	9.45%		0.84		0.95		17.04%		0.39		1.77
Dec 31, 2016	11.10%		0.85		0.94		18.93%		0.37		1.97
Dec 31, 2015	14.17%		0.82		0.96		20.65%		0.43		2.04
Dec 31, 2014	11.11%		0.75		0.97		18.10%		0.54		1.58
Dec 31, 2013	12.04%		0.76		0.96		19.42%		0.55		1.55

Source: Based on data from Danaher Corp. Annual Reports

The primary reason for the decrease in Return on Equity (ROE) over 2017 year is the decrease in Financial Leverage.

Two-Way Decomposition of ROA

Danaher Corp., decomposition of ROA

	ROA	=	Net Profit Margin	×	Asset Turnover

Dec 31, 2017	5.34%		13.60%		0.39
Dec 31, 2016	5.64%		15.13%		0.37
Dec 31, 2015	6.96%		16.33%		0.43
Dec 31, 2014	7.02%		13.05%		0.54
Dec 31, 2013	7.77%		14.10%		0.55

Source: Based on data from Danaher Corp. 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

Danaher Corp., decomposition of ROA

	ROA	=	Tax Burden	×	Interest Burden	×	EBIT Margin	×	Asset Turnover

Dec 31, 2017	5.34%		0.84		0.95		17.04%		0.39
Dec 31, 2016	5.64%		0.85		0.94		18.93%		0.37
Dec 31, 2015	6.96%		0.82		0.96		20.65%		0.43
Dec 31, 2014	7.02%		0.75		0.97		18.10%		0.54
Dec 31, 2013	7.77%		0.76		0.96		19.42%		0.55

Source: Based on data from Danaher Corp. Annual Reports

The primary reason for the decrease in Return on Assets (ROA) over 2017 year is the decrease in operating profitability measured by EBIT Margin.

Decomposition of Net Profit Margin

Danaher Corp., decomposition of Net Profit Margin

	Net Profit Margin	=	Tax Burden	×	Interest Burden	×	EBIT Margin

Dec 31, 2017	13.60%		0.84		0.95		17.04%
Dec 31, 2016	15.13%		0.85		0.94		18.93%
Dec 31, 2015	16.33%		0.82		0.96		20.65%
Dec 31, 2014	13.05%		0.75		0.97		18.10%
Dec 31, 2013	14.10%		0.76		0.96		19.42%

Source: Based on data from Danaher Corp. Annual Reports

The primary reason for the decrease in Net Profit Margin over 2017 year is the decrease in operating profitability measured by EBIT Margin.