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.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Reportable Segments
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Current Ratio since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Two-Component Disaggregation of ROE
FedEx Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-02-28), 10-Q (reporting date: 2024-11-30), 10-Q (reporting date: 2024-08-31), 10-K (reporting date: 2024-05-31), 10-Q (reporting date: 2024-02-29), 10-Q (reporting date: 2023-11-30), 10-Q (reporting date: 2023-08-31), 10-K (reporting date: 2023-05-31), 10-Q (reporting date: 2023-02-28), 10-Q (reporting date: 2022-11-30), 10-Q (reporting date: 2022-08-31), 10-K (reporting date: 2022-05-31), 10-Q (reporting date: 2022-02-28), 10-Q (reporting date: 2021-11-30), 10-Q (reporting date: 2021-08-31), 10-K (reporting date: 2021-05-31), 10-Q (reporting date: 2021-02-28), 10-Q (reporting date: 2020-11-30), 10-Q (reporting date: 2020-08-31), 10-K (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-Q (reporting date: 2019-08-31), 10-K (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-Q (reporting date: 2018-08-31).
- Return on Assets (ROA)
- The Return on Assets demonstrates a generally upward trend beginning from a low point in mid-2019. Initially, ROA decreased, reaching negative territory around May 31, 2020, followed by a notable recovery that peaked at 6.32% in August 31, 2021. After this peak, ROA shows some volatility but maintains fairly high levels, mostly between 4% and 5%, displaying resilience and sustained improvement over the extended period up to February 28, 2025.
- Financial Leverage
- Financial Leverage ratios started around 2.7 in late 2018 and generally increased up to a peak of approximately 4.02 around May 31, 2020. Following that peak, leverage decreased significantly and stabilized in the range of about 3.1 to 3.5 in the subsequent years, indicating a strategic reduction in asset-to-equity ratios and a move towards moderating financial risk over time.
- Return on Equity (ROE)
- Return on Equity tracked a similar pattern to ROA but with greater variability and higher peaks. Initially low or negative in early 2020, ROE rose sharply afterwards, achieving a high of over 21% in August 31, 2021. Post-peak, ROE declined gradually but remained strong, maintaining levels between approximately 12% and 16% through to early 2025. This suggests improved profitability and efficient use of equity capital, despite some fluctuations.
Three-Component Disaggregation of ROE
FedEx Corp., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-02-28), 10-Q (reporting date: 2024-11-30), 10-Q (reporting date: 2024-08-31), 10-K (reporting date: 2024-05-31), 10-Q (reporting date: 2024-02-29), 10-Q (reporting date: 2023-11-30), 10-Q (reporting date: 2023-08-31), 10-K (reporting date: 2023-05-31), 10-Q (reporting date: 2023-02-28), 10-Q (reporting date: 2022-11-30), 10-Q (reporting date: 2022-08-31), 10-K (reporting date: 2022-05-31), 10-Q (reporting date: 2022-02-28), 10-Q (reporting date: 2021-11-30), 10-Q (reporting date: 2021-08-31), 10-K (reporting date: 2021-05-31), 10-Q (reporting date: 2021-02-28), 10-Q (reporting date: 2020-11-30), 10-Q (reporting date: 2020-08-31), 10-K (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-Q (reporting date: 2019-08-31), 10-K (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-Q (reporting date: 2018-08-31).
- Net Profit Margin
- The net profit margin exhibits significant variability over the observed periods. Initial data points indicate a low margin around August 2019, with a minimal positive margin near 0.77%, followed by a decline into negative territory by May 2020, reaching -0.5%. Thereafter, a recovery and steady increase are noted, with margin values rising consistently from late 2020 into 2021, peaking above 6% in early 2021. Following this peak, the margin stabilizes between approximately 3.2% and 5.6%, showing moderate fluctuations but maintaining a positive trend toward the later dates through early 2025.
- Asset Turnover
- The asset turnover ratio demonstrates an initial decline from about 1.28 in August 2019 to roughly 0.92 by late 2019 and early 2020, reflecting reduced efficiency in asset utilization. A gradual recovery initiates in mid-2020, with a return to and slight surpassing of a ratio of 1.0 by early 2021. From this point onward, the ratio remains relatively stable, fluctuating narrowly around 1.01 to 1.1, indicating consistent efficiency in asset use through mid-2024 to early 2025.
- Financial Leverage
- Financial leverage shows an upward trend from initial values around 2.71 to peaks near 4.02 in mid-2020, suggesting increased use of debt or equity leverage during this period. Following the peak, there is a gradual downsizing trend where leverage ratios decline steadily throughout 2021 and subsequent years, leveling off around 3.15 to 3.55 in the periods leading to early 2025. This indicates a strategic reduction in leverage after the mid-2020 peak period.
- Return on Equity (ROE)
- The return on equity closely mirrors trends observed in net profit margin and asset turnover but exhibits pronounced volatility. Initially modest, with values below 3.5% before mid-2019, ROE drops into negative territory by mid-2020, consistent with the negative margin in that timeframe. A robust recovery follows, with a notable surge peaking near 21.6% in 2021, indicating a period of strong profitability relative to shareholder equity. Subsequently, ROE declines gradually but remains elevated between roughly 13% and 16.7% through early 2025, reflecting sustained profitability and effective equity utilization.
- Overall Analysis
- The data indicates an initial period of strained profitability and asset efficiency culminating in mid-2020, coinciding with increased financial leverage. This period is characterized by decreased net profit margins, negative returns on equity, and reduced asset turnover. Post mid-2020, the company demonstrates recovery with improving margin and profitability metrics, a return to stable asset turnover, and a strategic reduction in financial leverage. The trends suggest responsive management actions improving operational efficiency and reducing financial risk, resulting in stronger and more consistent returns on equity into early 2025.
Two-Component Disaggregation of ROA
FedEx Corp., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2025-02-28), 10-Q (reporting date: 2024-11-30), 10-Q (reporting date: 2024-08-31), 10-K (reporting date: 2024-05-31), 10-Q (reporting date: 2024-02-29), 10-Q (reporting date: 2023-11-30), 10-Q (reporting date: 2023-08-31), 10-K (reporting date: 2023-05-31), 10-Q (reporting date: 2023-02-28), 10-Q (reporting date: 2022-11-30), 10-Q (reporting date: 2022-08-31), 10-K (reporting date: 2022-05-31), 10-Q (reporting date: 2022-02-28), 10-Q (reporting date: 2021-11-30), 10-Q (reporting date: 2021-08-31), 10-K (reporting date: 2021-05-31), 10-Q (reporting date: 2021-02-28), 10-Q (reporting date: 2020-11-30), 10-Q (reporting date: 2020-08-31), 10-K (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-Q (reporting date: 2019-08-31), 10-K (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-Q (reporting date: 2018-08-31).
- Net Profit Margin
- The net profit margin exhibits variability over the observed periods. Initial data starting from August 31, 2019, reveals a low margin fluctuating around 0.11% to -0.5% up to May 31, 2020. This is followed by a steady upward trend, reaching a peak of 6.23% by August 31, 2021. Subsequently, the margin demonstrates a slight decline but remains relatively robust, stabilizing in the range of approximately 3.2% to 5.6% through to May 31, 2024. The recent quarters maintain margins around the mid-4% range, indicating consistent profitability after the earlier volatility.
- Asset Turnover
- The asset turnover ratio appears to be relatively stable across the periods with minor fluctuations. Starting near 1.28 in August 31, 2019, it declines to near 0.92 by November 30, 2020, suggesting a slight dip in efficiency in generating sales from assets. From early 2021 onwards, the ratio shows gradual improvement, ascending above 1.0 from May 31, 2021, and maintaining levels slightly above 1.0 in subsequent quarters. The consistency around this level through to February 28, 2025, suggests marginal improvement and stable utilization of assets to generate revenues.
- Return on Assets (ROA)
- The ROA reveals a trend similar to net profit margin, starting with low or negative values near zero to -0.5% in early 2020, indicating periods of reduced profitability relative to total assets. A significant improvement occurs from August 31, 2020, moving upward to a peak of 6.32% by August 31, 2021. Post this peak, the ROA moderately declines but remains in a steady range between approximately 3.5% and 6.1%, reflecting sustained efficiency in generating profit from assets. The ratio shows signs of consistency in recent periods, hovering around 4.5% to 5.1% through to May 31, 2024, reinforcing a stable return profile.