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.
Paying user area
Try for free
Merck & Co. Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Present Value of Free Cash Flow to Equity (FCFE)
- Current Ratio since 2005
- Debt to Equity since 2005
- Analysis of Debt
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Merck & Co. Inc. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Two-Component Disaggregation of ROE
Merck & Co. Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Return on Assets (ROA)
- The ROA metric demonstrates variability over the observed periods with an initial value around 7.72% in early 2020, followed by an overall upward trend that peaks at 15.48% by September 2022. However, there is a notable decline after this peak, dropping sharply to 0.34% by September 2023. Subsequently, ROA recovers gradually, reaching 15.14% by the end of the projection in March 2025. This pattern indicates periods of improved asset efficiency interspersed with phases of reduced profitability on assets, suggesting fluctuating operational performance or asset utilization efficiency.
- Financial Leverage
- Financial leverage ratios show a generally declining trend from 3.24 at the beginning of the period in March 2020 to around 2.38 by March 2025. Some minor fluctuations are observed, such as a peak at 3.62 in December 2020, followed by a downward adjustment and relative stabilization in the mid-2s range from 2021 onward. This decline suggests a gradual reduction in reliance on debt relative to equity, indicating a more conservative capital structure approach over time.
- Return on Equity (ROE)
- ROE displays significant volatility. Beginning at approximately 27.91% in early 2020, it experiences several peaks and troughs, reaching highs of 38.34% in September 2022 and lows near 0.97% in September 2023. After this low, ROE recovers strongly to around 36.07% by March 2025. This pattern reflects varying effectiveness in generating returns on shareholders' equity, possibly impacted by changes in operational results, financial leverage, or other equity-related factors.
- Summary of Trends
- The data reveals a dynamic performance environment where profitability metrics experience significant fluctuations. ROA and ROE both indicate periods of strong profitability followed by sharp declines and subsequent recoveries, implying potential volatility in earnings or asset utilization. Concurrently, a steady reduction in financial leverage suggests a deliberate move toward lower debt levels, potentially to mitigate risk or improve financial stability. The interplay between these trends highlights a balancing act between enhancing returns and managing financial risk over the examined timeline.
Three-Component Disaggregation of ROE
Merck & Co. Inc., decomposition of ROE (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Net Profit Margin
- The net profit margin demonstrates notable fluctuations over the analyzed periods. Beginning from a documented figure of 14.72% in March 2021, it experiences variation with a downward trend around late 2023, reaching a low of 0.61% in September 2023. Subsequently, the margin recovers strongly, peaking at 29.00% in September 2022 before this decrease and again rising towards 27.27% by March 2025. This pattern suggests periods of both strong profitability and operational challenges within the timeframe.
- Asset Turnover
- Asset turnover remains relatively stable across the periods, fluctuating modestly between 0.46 and 0.58. Initial values around 0.52 in early 2021 gradually improve to a higher range around 0.54 to 0.58 in the later years, indicating a slightly more efficient use of assets to generate sales. The consistency with gradual improvement reflects operational stability and slight optimization in asset utilization.
- Financial Leverage
- Financial leverage shows a decreasing trend over the examined periods, starting from a high of 3.62 at the end of 2020 and falling to approximately 2.3 to 2.7 range in the following years. Towards the end of the timeframe, it further declines to 2.38 by March 2025. This suggests a reduction in reliance on debt financing or a repositioning of the capital structure towards more equity-based financing, potentially lowering financial risk.
- Return on Equity (ROE)
- Return on equity reflects significant volatility, with a general alignment with net profit margin trends. Beginning from 27.91% in March 2021, ROE declines markedly to a low below 1% in September 2023, indicating a temporary dip in shareholder returns. Following this trough, ROE recovers sharply to nearly 37% by September 2024 and maintains a similar level through March 2025. This suggests that the company experienced a cycle of diminished returns before a robust rebound in profitability and equity efficiency.
Two-Component Disaggregation of ROA
Merck & Co. Inc., decomposition of ROA (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Net Profit Margin
- The net profit margin data begins in March 2021, showing an initial value of 14.72%. There is moderate fluctuation during 2021, with values ranging from 11.83% to 15.09%, reflecting some variability in profitability. A notable increase occurs in the first quarter of 2022, reaching 26.79%, followed by a generally elevated margin throughout 2022, peaking at 29% in September. However, this is succeeded by a sharp decline in early 2023, dipping to 5.34% in March, before a mild recovery in the latter part of 2023 and early 2024. Towards the most recent quarters, the margin demonstrates a strong upward trend again, ending around 27.27% in March 2025, suggesting improved profitability and efficiency compared to the earlier period.
- Asset Turnover
- Asset turnover values commence at 0.52 in March 2021 and show stability around the 0.51 to 0.56 range throughout the full period under review. Minor fluctuations occur, but the ratio remains relatively steady, with a slight upward drift observed in the second half of 2023 and into 2024. This stability indicates consistent efficiency in generating sales from assets over time, with no significant deterioration or extraordinary improvement.
- Return on Assets (ROA)
- Return on assets follows a pattern similar to net profit margin, starting at 7.72% in March 2021. It rises steadily through 2021 and peaks at 15.48% in September 2022, indicating enhanced overall profitability and effective asset use. However, there is a marked decline in early 2023, dropping to 2.98% by March and bottoming at 0.34% in September 2023, signifying a temporary period of reduced earnings or asset utilization. This trough is followed by recovery phases in late 2023 and 2024, where ROA climbs back to values above 14% by March 2025, aligning with the resurgence in net profit margin and suggesting a restored operational performance.