Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Oracle Corp. (NYSE:ORCL)

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

Beginner level

Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.

Two-Component Disaggregation of ROE

Oracle Corp., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Financial Leverage
May 31, 2020 83.94% = 8.78% × 9.56
May 31, 2019 50.87% = 10.20% × 4.99
May 31, 2018 8.37% = 2.79% × 3.00
May 31, 2017 17.33% = 6.92% × 2.51
May 31, 2016 18.82% = 7.93% × 2.37
May 31, 2015 20.42% = 8.96% × 2.28

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

The primary reason for the increase in return on equity ratio (ROE) over 2020 year is the increase in financial leverage ratio.

Three-Component Disaggregation of ROE

Oracle Corp., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
May 31, 2020 83.94% = 25.94% × 0.34 × 9.56
May 31, 2019 50.87% = 28.05% × 0.36 × 4.99
May 31, 2018 8.37% = 9.60% × 0.29 × 3.00
May 31, 2017 17.33% = 24.74% × 0.28 × 2.51
May 31, 2016 18.82% = 24.03% × 0.33 × 2.37
May 31, 2015 20.42% = 26.00% × 0.34 × 2.28

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

The primary reason for the increase in return on equity ratio (ROE) over 2020 year is the increase in financial leverage ratio.

Five-Component Disaggregation of ROE

Oracle Corp., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
May 31, 2020 83.94% = 0.84 × 0.86 × 35.98% × 0.34 × 9.56
May 31, 2019 50.87% = 0.90 × 0.85 × 36.32% × 0.36 × 4.99
May 31, 2018 8.37% = 0.30 × 0.86 × 37.45% × 0.29 × 3.00
May 31, 2017 17.33% = 0.81 × 0.86 × 35.29% × 0.28 × 2.51
May 31, 2016 18.82% = 0.78 × 0.89 × 34.84% × 0.33 × 2.37
May 31, 2015 20.42% = 0.77 × 0.92 × 36.56% × 0.34 × 2.28

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

The primary reason for the increase in return on equity ratio (ROE) over 2020 year is the increase in financial leverage ratio.

Two-Component Disaggregation of ROA

Oracle Corp., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
May 31, 2020 8.78% = 25.94% × 0.34
May 31, 2019 10.20% = 28.05% × 0.36
May 31, 2018 2.79% = 9.60% × 0.29
May 31, 2017 6.92% = 24.74% × 0.28
May 31, 2016 7.93% = 24.03% × 0.33
May 31, 2015 8.96% = 26.00% × 0.34

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

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

Four-Component Disaggregation of ROA

Oracle Corp., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
May 31, 2020 8.78% = 0.84 × 0.86 × 35.98% × 0.34
May 31, 2019 10.20% = 0.90 × 0.85 × 36.32% × 0.36
May 31, 2018 2.79% = 0.30 × 0.86 × 37.45% × 0.29
May 31, 2017 6.92% = 0.81 × 0.86 × 35.29% × 0.28
May 31, 2016 7.93% = 0.78 × 0.89 × 34.84% × 0.33
May 31, 2015 8.96% = 0.77 × 0.92 × 36.56% × 0.34

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

The primary reason for the decrease in return on assets ratio (ROA) over 2020 year is the decrease in effect of taxes measured by tax burden ratio.

Disaggregation of Net Profit Margin

Oracle Corp., decomposition of net profit margin ratio

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
May 31, 2020 25.94% = 0.84 × 0.86 × 35.98%
May 31, 2019 28.05% = 0.90 × 0.85 × 36.32%
May 31, 2018 9.60% = 0.30 × 0.86 × 37.45%
May 31, 2017 24.74% = 0.81 × 0.86 × 35.29%
May 31, 2016 24.03% = 0.78 × 0.89 × 34.84%
May 31, 2015 26.00% = 0.77 × 0.92 × 36.56%

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

The primary reason for the decrease in net profit margin ratio over 2020 year is the decrease in effect of taxes measured by tax burden ratio.