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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
Union Pacific Corp., decomposition of ROE
| ROE | = | ROA | × | Financial Leverage | |
|---|---|---|---|---|---|
| Dec 31, 2019 | = | × | |||
| Dec 31, 2018 | = | × | |||
| Dec 31, 2017 | = | × | |||
| Dec 31, 2016 | = | × | |||
| Dec 31, 2015 | = | × |
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05).
The primary reason for the increase in return on equity ratio (ROE) over 2019 year is the increase in financial leverage ratio.
Three-Component Disaggregation of ROE
Union Pacific Corp., decomposition of ROE
| ROE | = | Net Profit Margin | × | Asset Turnover | × | Financial Leverage | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × | ||||
| Dec 31, 2016 | = | × | × | ||||
| Dec 31, 2015 | = | × | × |
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05).
The primary reason for the increase in return on equity ratio (ROE) over 2019 year is the increase in financial leverage ratio.
Five-Component Disaggregation of ROE
Union Pacific Corp., decomposition of ROE
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05).
The primary reason for the increase in return on equity ratio (ROE) over 2019 year is the increase in financial leverage ratio.
Two-Component Disaggregation of ROA
Union Pacific Corp., decomposition of ROA
| ROA | = | Net Profit Margin | × | Asset Turnover | |
|---|---|---|---|---|---|
| Dec 31, 2019 | = | × | |||
| Dec 31, 2018 | = | × | |||
| Dec 31, 2017 | = | × | |||
| Dec 31, 2016 | = | × | |||
| Dec 31, 2015 | = | × |
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05).
The primary reason for the decrease in return on assets ratio (ROA) over 2019 year is the decrease in asset turnover ratio.
Four-Component Disaggregation of ROA
Union Pacific Corp., decomposition of ROA
| ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
|---|---|---|---|---|---|---|---|---|---|
| Dec 31, 2019 | = | × | × | × | |||||
| Dec 31, 2018 | = | × | × | × | |||||
| Dec 31, 2017 | = | × | × | × | |||||
| Dec 31, 2016 | = | × | × | × | |||||
| Dec 31, 2015 | = | × | × | × |
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05).
The primary reason for the decrease in return on assets ratio (ROA) over 2019 year is the decrease in efficiency measured by asset turnover ratio.
Disaggregation of Net Profit Margin
Union Pacific Corp., decomposition of net profit margin ratio
| Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × | ||||
| Dec 31, 2016 | = | × | × | ||||
| Dec 31, 2015 | = | × | × |
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05).
The primary reason for the increase in net profit margin ratio over 2019 year is the increase in operating profitability measured by EBIT margin ratio.