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: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value (EV)
- Current Ratio since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Two-Component Disaggregation of ROE
RTX Corp., 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: 2024-03-03), 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 demonstrated a significant shift over the observed periods. Early data points show negative values, reaching a low of -2.17% in December 2020. Beginning in March 2021, ROA turned positive, indicating improved asset efficiency, with a steady increase reaching a peak of approximately 3.43% in June and September 2023. After that peak, the ROA experienced a decline to as low as 1.4% in September 2024, followed by a recovery towards the end of the timeline, finishing near 2.79% by March 2025. The trend suggests initial challenges with asset profitability, followed by sustained improvement with some volatility in the later periods.
- Financial Leverage
- Financial leverage ratios decreased substantially from 3.54 in March 2020 to about 2.19 by December 2022, showing a trend toward reduced use of debt relative to equity. From early 2023 onwards, leverage started to gradually increase, peaking around 2.71 during the early and middle parts of 2024, before slightly declining to 2.68 by March 2025. This pattern reflects a cautious approach to leverage with a period of deleveraging followed by moderate re-leveraging, possibly indicating a strategic balance between risk and growth financing.
- Return on Equity (ROE)
- ROE followed a pattern similar to ROA but with greater magnitude changes. It was strongly negative through December 2020, hitting -4.88%, indicating challenges in generating returns for shareholders. Starting in March 2021, ROE turned positive and consistently increased, reaching a high near 7.94% in June 2024. Despite some fluctuations in late 2024, it remained robust above 7% by March 2025. The increasing ROE trend suggests improving profitability and effective use of shareholders' equity, likely supported by the improved operational efficiency and manageable leverage levels.
Three-Component Disaggregation of ROE
RTX Corp., 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: 2024-03-03), 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 shows a negative value in early 2020, reaching -6.22% by December 31, 2020, indicating that the company experienced losses during this period. Subsequently, a recovery trend is observed starting from March 31, 2021, moving into positive territory at 3.51% and peaking above 8% by March 31, 2023. After this peak, the margin experiences some volatility and a downward adjustment, settling around 5.63% by March 31, 2025. This pattern suggests improvement in profitability over time, with some fluctuations in the later years.
- Asset Turnover
- Asset turnover data is missing for the earlier periods but starts at 0.35 in March 31, 2021. There is a steady increase throughout the timeframe, reaching 0.50 by December 31, 2024, and maintaining this level through March 31, 2025. This trend indicates that the company has been improving its efficiency in generating sales from its asset base consistently over the observed periods.
- Financial Leverage
- Financial leverage decreased significantly from 3.54 in March 31, 2020 to 2.19 by December 31, 2022, showing a reduction in the extent of debt relative to equity. From early 2023 onwards, leverage edges upwards, peaking near 2.71 in June 30, 2024, before slightly decreasing again to 2.68 by March 31, 2025. This implies a deliberate management of financial risk with some increase in leverage in the more recent periods, although remaining notably lower than the initial 2020 level.
- Return on Equity (ROE)
- ROE follows a trajectory similar to net profit margin, starting with negative returns around -4.88% at December 31, 2020, reflecting unprofitable operations. Improvements begin in 2021 with positive ROE surpassing 7% by March 31, 2023. Post this peak, ROE exhibits some volatility, decreasing to around 3.83% by September 30, 2024, then increasing again to approximately 7.48% by March 31, 2025. These movements indicate a generally positive trend in generating shareholder returns, albeit with notable fluctuations in the most recent quarters.
Two-Component Disaggregation of ROA
RTX Corp., 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: 2024-03-03), 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
- Beginning in the fourth quarter of 2020, the net profit margin showed a negative performance, with values of -6.22% and -4.44% in successive quarters. From the first quarter of 2021 onward, there was a clear upward trend, turning positive and steadily increasing through 2023, peaking at 8.08% in the second quarter of 2023. Thereafter, a declining trend is observed from late 2023 into 2024, with the margin falling to a low of 3.12% in the third quarter of 2024, before recovering somewhat to remain around 5.6% by the first quarter of 2025. Overall, the net profit margin transitioned from negative territory to consistently positive, indicating improving profitability with some recent volatility.
- Asset Turnover
- Data for asset turnover starts from the fourth quarter of 2020, showing a gradual and steady increase from 0.35 to 0.5 by the end of the first quarter of 2025. This steady growth signifies enhanced efficiency in utilizing assets to generate revenue over time. The ratio demonstrated consistent incremental gains without significant reversals, suggesting improving operational performance and asset utilization throughout the observed period.
- Return on Assets (ROA)
- The return on assets initially reflected negative values in late 2020, with -2.17% followed by -1.67%. From early 2021, ROA turned positive and showed gradual growth, reaching a high of approximately 3.43% in mid-2023. However, starting in late 2023, there was a downward trend in ROA, dipping to lows around 1.4% in late 2024, before partially recovering to roughly 2.8% by the first quarter of 2025. The pattern mirrors that of net profit margin, though with somewhat less volatility, indicating variations in profitability relative to the asset base over time.