Stock Analysis on Net
Stock Analysis on Net
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Johnson & Johnson (NYSE:JNJ)

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin

Beginner level

Two-Component Disaggregation of ROE

Johnson & Johnson, decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Financial Leverage
Dec 31, 2020 23.25% = 8.41% × 2.76
Dec 29, 2019 25.42% = 9.59% × 2.65
Dec 30, 2018 25.60% = 10.00% × 2.56
Dec 31, 2017 2.16% = 0.83% × 2.61
Dec 31, 2016 23.49% = 11.71% × 2.01

Based on: 10-K (filing date: 2021-02-22), 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27).

The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in profitability measured by return on assets ratio (ROA).


Three-Component Disaggregation of ROE

Johnson & Johnson, decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2020 23.25% = 17.82% × 0.47 × 2.76
Dec 29, 2019 25.42% = 18.42% × 0.52 × 2.65
Dec 30, 2018 25.60% = 18.75% × 0.53 × 2.56
Dec 31, 2017 2.16% = 1.70% × 0.49 × 2.61
Dec 31, 2016 23.49% = 23.01% × 0.51 × 2.01

Based on: 10-K (filing date: 2021-02-22), 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27).

The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in efficiency measured by asset turnover ratio.


Five-Component Disaggregation of ROE

Johnson & Johnson, decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2020 23.25% = 0.89 × 0.99 × 20.22% × 0.47 × 2.76
Dec 29, 2019 25.42% = 0.87 × 0.98 × 21.50% × 0.52 × 2.65
Dec 30, 2018 25.60% = 0.85 × 0.95 × 23.29% × 0.53 × 2.56
Dec 31, 2017 2.16% = 0.07 × 0.95 × 24.34% × 0.49 × 2.61
Dec 31, 2016 23.49% = 0.84 × 0.96 × 28.56% × 0.51 × 2.01

Based on: 10-K (filing date: 2021-02-22), 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27).

The primary reason for the decrease in return on equity ratio (ROE) over 2020 year is the decrease in efficiency measured by asset turnover ratio.


Two-Component Disaggregation of ROA

Johnson & Johnson, decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2020 8.41% = 17.82% × 0.47
Dec 29, 2019 9.59% = 18.42% × 0.52
Dec 30, 2018 10.00% = 18.75% × 0.53
Dec 31, 2017 0.83% = 1.70% × 0.49
Dec 31, 2016 11.71% = 23.01% × 0.51

Based on: 10-K (filing date: 2021-02-22), 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27).

The primary reason for the decrease in return on assets ratio (ROA) over 2020 year is the decrease in asset turnover ratio.


Four-Component Disaggregation of ROA

Johnson & Johnson, decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2020 8.41% = 0.89 × 0.99 × 20.22% × 0.47
Dec 29, 2019 9.59% = 0.87 × 0.98 × 21.50% × 0.52
Dec 30, 2018 10.00% = 0.85 × 0.95 × 23.29% × 0.53
Dec 31, 2017 0.83% = 0.07 × 0.95 × 24.34% × 0.49
Dec 31, 2016 11.71% = 0.84 × 0.96 × 28.56% × 0.51

Based on: 10-K (filing date: 2021-02-22), 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27).

The primary reason for the decrease in return on assets ratio (ROA) over 2020 year is the decrease in efficiency measured by asset turnover ratio.


Disaggregation of Net Profit Margin

Johnson & Johnson, decomposition of net profit margin ratio

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2020 17.82% = 0.89 × 0.99 × 20.22%
Dec 29, 2019 18.42% = 0.87 × 0.98 × 21.50%
Dec 30, 2018 18.75% = 0.85 × 0.95 × 23.29%
Dec 31, 2017 1.70% = 0.07 × 0.95 × 24.34%
Dec 31, 2016 23.01% = 0.84 × 0.96 × 28.56%

Based on: 10-K (filing date: 2021-02-22), 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-20), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-27).

The primary reason for the decrease in net profit margin ratio over 2020 year is the decrease in operating profitability measured by EBIT margin ratio.