Microsoft Excel LibreOffice Calc

United Technologies Corp. (UTX)


DuPont Analysis: Decomposition of ROE

Difficulty: Beginner


Two-Component Disaggregation of ROE

United Technologies Corp., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Leverage
Dec 31, 2018 13.70% = 3.93% × 3.49
Dec 31, 2017 15.37% = 4.70% × 3.27
Dec 31, 2016 18.33% = 5.64% × 3.25
Dec 31, 2015 27.81% = 8.70% × 3.20
Dec 31, 2014 19.93% = 6.81% × 2.92

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-05).

The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in profitability measured by Return on Assets (ROA).


Three-Component Disaggregation of ROE

United Technologies Corp., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Leverage
Dec 31, 2018 13.70% = 7.92% × 0.50 × 3.49
Dec 31, 2017 15.37% = 7.61% × 0.62 × 3.27
Dec 31, 2016 18.33% = 8.83% × 0.64 × 3.25
Dec 31, 2015 27.81% = 13.56% × 0.64 × 3.20
Dec 31, 2014 19.93% = 9.55% × 0.71 × 2.92

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-05).

The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in efficiency measured by Asset Turnover.


Five-Component Disaggregation of ROE

United Technologies Corp., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Leverage
Dec 31, 2018 13.70% = 0.67 × 0.87 × 13.71% × 0.50 × 3.49
Dec 31, 2017 15.37% = 0.62 × 0.88 × 14.06% × 0.62 × 3.27
Dec 31, 2016 18.33% = 0.75 × 0.85 × 13.82% × 0.64 × 3.25
Dec 31, 2015 27.81% = 0.78 × 0.91 × 19.01% × 0.64 × 3.20
Dec 31, 2014 19.93% = 0.73 × 0.89 × 14.72% × 0.71 × 2.92

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-05).

The primary reason for the decrease in Return on Equity (ROE) over 2018 year is the decrease in efficiency measured by Asset Turnover.


Two-Way Decomposition of ROA

United Technologies Corp., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2018 3.93% = 7.92% × 0.50
Dec 31, 2017 4.70% = 7.61% × 0.62
Dec 31, 2016 5.64% = 8.83% × 0.64
Dec 31, 2015 8.70% = 13.56% × 0.64
Dec 31, 2014 6.81% = 9.55% × 0.71

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-05).

The primary reason for the decrease in Return on Assets (ROA) over 2018 year is the decrease in Asset Turnover.


Four-Way Decomposition of ROA

United Technologies Corp., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2018 3.93% = 0.67 × 0.87 × 13.71% × 0.50
Dec 31, 2017 4.70% = 0.62 × 0.88 × 14.06% × 0.62
Dec 31, 2016 5.64% = 0.75 × 0.85 × 13.82% × 0.64
Dec 31, 2015 8.70% = 0.78 × 0.91 × 19.01% × 0.64
Dec 31, 2014 6.81% = 0.73 × 0.89 × 14.72% × 0.71

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-05).

The primary reason for the decrease in Return on Assets (ROA) over 2018 year is the decrease in efficiency measured by Asset Turnover.


Decomposition of Net Profit Margin

United Technologies Corp., decomposition of Net Profit Margin

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2018 7.92% = 0.67 × 0.87 × 13.71%
Dec 31, 2017 7.61% = 0.62 × 0.88 × 14.06%
Dec 31, 2016 8.83% = 0.75 × 0.85 × 13.82%
Dec 31, 2015 13.56% = 0.78 × 0.91 × 19.01%
Dec 31, 2014 9.55% = 0.73 × 0.89 × 14.72%

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-05).

The primary reason for the increase in Net Profit Margin over 2018 year is the increase in effect of taxes measured by Tax Burden.