DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
Paying user area
Try for free
Ecolab Inc. pages available for free this week:
- Income Statement
- Statement of Comprehensive Income
- Common-Size Income Statement
- Analysis of Liquidity Ratios
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Current Ratio since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Ecolab Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Two-Component Disaggregation of ROE
Ecolab Inc., decomposition of ROE
| ROE | = | ROA | × | Financial Leverage | |
|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | |||
| Dec 31, 2020 | = | × | |||
| Dec 31, 2019 | = | × | |||
| Dec 31, 2018 | = | × | |||
| Dec 31, 2017 | = | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Return on Assets (ROA)
- The Return on Assets demonstrated a generally positive trend from 2017 to 2019, with values slightly fluctuating between 7.12% and 7.56%. However, a significant decline occurred in 2020, where ROA dropped sharply to -6.65%, indicating a period of asset inefficiency or losses. In 2021, ROA recovered to 5.33%, signaling a rebound though not reaching the pre-2020 levels.
- Financial Leverage
- Financial Leverage showed variability but remained relatively stable over the period. It decreased from 2.62 in 2017 to 2.4 in 2019, suggesting a slight reduction in the use of debt relative to equity. Nonetheless, there was an increase to 2.94 in 2020, which then remained steady through 2021. This suggests an increased reliance on debt during and after 2020.
- Return on Equity (ROE)
- Return on Equity followed a pattern similar to ROA. From 2017 to 2019, ROE slightly declined from 19.8% to 17.95%, maintaining positive returns for shareholders. However, in 2020, ROE sharply turned negative to -19.54%, reflecting a significant loss or reduced profitability impacting equity holders. By 2021, ROE improved to 15.64%, indicating a recovery but still below earlier years' performance.
Three-Component Disaggregation of ROE
Ecolab Inc., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Financial Leverage | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Net Profit Margin
- The net profit margin exhibited relatively stable positive values from 2017 through 2019, fluctuating between 9.74% and 10.9%. However, there was a significant decline in 2020, where the margin turned negative to -10.22%, indicating a loss. The margin recovered partially in 2021 to 8.87%, but did not return to the pre-2020 levels.
- Asset Turnover
- Asset turnover demonstrated a gradual downward trend over the period. It started at 0.69 in 2017, increased slightly to 0.73 in 2018, then decreased stepwise to 0.6 by 2021. This decline suggests decreasing efficiency in generating sales from assets over the analyzed years.
- Financial Leverage
- Financial leverage decreased from 2.62 in 2017 to 2.4 in 2019, reflecting a slight reduction in the use of debt relative to equity. However, it rose back to 2.94 in 2020 and remained at that level in 2021, indicating increased reliance on debt financing during the latter part of the period.
- Return on Equity (ROE)
- ROE followed a pattern consistent with net profit margin. It decreased from 19.8% in 2017 to approximately 17.9% in 2018 and 2019, reflecting solid profitability. In 2020, ROE dropped sharply to -19.54%, signifying a substantial loss. By 2021, there was recovery to 15.64%, though still below earlier peak performance levels.
Five-Component Disaggregation of ROE
Ecolab Inc., decomposition of ROE
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Tax Burden
- The tax burden ratio showed a slight decline from 0.86 in 2017 to 0.80 in 2018, followed by a modest increase to 0.83 in 2019. The ratio was not reported for 2020, and then it decreased again to 0.81 in 2021. Overall, the tax burden remained relatively stable with minor fluctuations.
- Interest Burden
- The interest burden ratio improved steadily from 0.86 in 2017 to 0.88 in 2018 and 0.90 in 2019, indicating a decreasing interest expense relative to EBIT. Data for 2020 is missing, but in 2021 the ratio declined back to 0.86, suggesting an increase in interest expenses or decreased EBIT relative to interest expenses in that year.
- EBIT Margin
- The EBIT margin showed a downward trend from 14.64% in 2017 to 13.84% in 2018, followed by a slight recovery to 14.07% in 2019. However, there was a sharp drop to -6.14% in 2020, indicating an operational loss during that year. In 2021, the margin improved significantly to 12.81%, recovering much of the previous decline but still below pre-2020 levels.
- Asset Turnover
- Asset turnover ratio increased from 0.69 in 2017 to 0.73 in 2018, then declined slightly to 0.71 in 2019. It further decreased to 0.65 in 2020 and 0.60 in 2021, showing a consistent reduction in the efficiency of asset utilization over the last three years.
- Financial Leverage
- Financial leverage decreased from 2.62 in 2017 to 2.51 in 2018 and further to 2.40 in 2019, indicating a reduction in the use of debt financing relative to equity. However, there was a reversal in this trend with an increase to 2.94 in both 2020 and 2021, reflecting higher reliance on debt or lower equity during these years.
- Return on Equity (ROE)
- ROE declined from 19.8% in 2017 to 17.86% and 17.95% in 2018 and 2019 respectively, indicating a modest decrease in profitability for shareholders. In 2020, there was a substantial negative ROE of -19.54%, reflecting significant losses impacting shareholder returns. In 2021, ROE recovered to 15.64%, demonstrating improvement but remaining below the levels observed in the years prior to 2020.
Two-Component Disaggregation of ROA
Ecolab Inc., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | |||
| Dec 31, 2020 | = | × | |||
| Dec 31, 2019 | = | × | |||
| Dec 31, 2018 | = | × | |||
| Dec 31, 2017 | = | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Net Profit Margin
- The net profit margin experienced fluctuations over the analyzed periods. It started at 10.9% in 2017, decreased slightly to 9.74% in 2018, and then increased to 10.46% in 2019. A significant drop occurred in 2020, when the margin turned negative to -10.22%, indicating a loss. The margin recovered to a positive 8.87% in 2021, although it had not yet returned to the levels seen in earlier years.
- Asset Turnover
- The asset turnover ratio showed a generally declining trend over the period. It increased marginally from 0.69 in 2017 to 0.73 in 2018, then slightly decreased to 0.71 in 2019. From 2019 onward, the ratio declined steadily to 0.65 in 2020 and further to 0.60 in 2021, suggesting a reduction in the efficiency of assets used to generate sales.
- Return on Assets (ROA)
- The return on assets mirrored the net profit margin's pattern, indicating profitability trends relative to assets. It decreased from 7.56% in 2017 to 7.12% in 2018, slightly rebounded to 7.47% in 2019, and then sharply declined to -6.65% in 2020, reflecting the significant net loss observed that year. In 2021, ROA improved to 5.33%, but remained below the positive returns recorded prior to 2020.
Four-Component Disaggregation of ROA
Ecolab Inc., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | × | |||||
| Dec 31, 2020 | = | × | × | × | |||||
| Dec 31, 2019 | = | × | × | × | |||||
| Dec 31, 2018 | = | × | × | × | |||||
| Dec 31, 2017 | = | × | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Tax Burden
- The tax burden ratio shows a slight fluctuation from 0.86 in 2017, decreasing to 0.80 in 2018, then increasing to 0.83 in 2019, followed by missing data in 2020, and finally settling at 0.81 in 2021. Overall, the tax burden remained relatively stable with minor variations.
- Interest Burden
- The interest burden ratio exhibited a generally stable trend, starting at 0.86 in 2017, rising to 0.88 in 2018, peaking at 0.90 in 2019, then missing data in 2020, and decreasing back to 0.86 in 2021. This suggests some fluctuation but a return to the initial level by 2021.
- EBIT Margin
- The EBIT margin shows a downward trend in 2018 and 2019 compared to 2017, with values decreasing from 14.64% to 13.84% and 14.07%, respectively. There is a significant negative drop to -6.14% in 2020, indicating a considerable operational loss. This is followed by a recovery to 12.81% in 2021, though still below the initial levels of 2017-2019.
- Asset Turnover
- The asset turnover ratio increased slightly from 0.69 in 2017 to 0.73 in 2018, then declined to 0.71 in 2019, further decreasing to 0.65 in 2020, and continuing to decline to 0.60 in 2021. This suggests a gradual decrease in the efficiency of asset utilization over the recent years, particularly after 2018.
- Return on Assets (ROA)
- The return on assets mirrored the EBIT margin trend, starting at 7.56% in 2017, dipping to 7.12% in 2018, and increasing slightly to 7.47% in 2019. A sharp decline is observed in 2020, with a negative ROA of -6.65%, indicating losses. In 2021, ROA improved to 5.33%, though it remained significantly below the earlier period averages.
Disaggregation of Net Profit Margin
Ecolab Inc., decomposition of net profit margin ratio
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Tax Burden
- The tax burden ratio exhibited a slight decline from 0.86 in 2017 to 0.80 in 2018, followed by a marginal increase to 0.83 in 2019. Data for 2020 is missing, and in 2021, the ratio decreased to 0.81. Overall, the tax burden shows relative stability with minor fluctuations over the reported periods.
- Interest Burden
- The interest burden ratio gradually increased from 0.86 in 2017 to 0.90 in 2019, indicating a slightly higher ability to cover interest expenses with operating earnings during this period. The 2020 data is not provided. In 2021, the interest burden ratio decreased back to 0.86, returning to the initial level observed in 2017.
- EBIT Margin
- The EBIT margin showed a relatively steady positive performance from 14.64% in 2017, decreasing slightly to 13.84% in 2018, and then recovering marginally to 14.07% in 2019. However, there was a significant negative downturn in 2020, with the EBIT margin falling sharply to -6.14%. In 2021, the margin rebounded to 12.81%, reflecting a notable recovery yet remaining below the pre-2020 levels.
- Net Profit Margin
- The net profit margin followed a similar trend to the EBIT margin, decreasing from 10.9% in 2017 to 9.74% in 2018, and then slightly improving to 10.46% in 2019. A pronounced decline occurred in 2020 with the margin falling to -10.22%, indicating a net loss for the year. In 2021, the margin improved to 8.87% but did not revert to the levels seen prior to 2020.