Stock Analysis on Net
Stock Analysis on Net

Zoetis Inc. (NYSE:ZTS)

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

Microsoft Excel

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

Two-Component Disaggregation of ROE

Zoetis Inc., decomposition of ROE

Microsoft Excel
ROE = ROA × Financial Leverage
Dec 31, 2023 46.91% = 16.41% × 2.86
Dec 31, 2022 47.99% = 14.16% × 3.39
Dec 31, 2021 44.84% = 14.65% × 3.06
Dec 31, 2020 43.46% = 12.04% × 3.61
Dec 31, 2019 55.39% = 12.99% × 4.26

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The primary reason for the decrease in return on equity ratio (ROE) over 2023 year is the decrease in financial leverage ratio.

Three-Component Disaggregation of ROE

Zoetis Inc., decomposition of ROE

Microsoft Excel
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2023 46.91% = 27.43% × 0.60 × 2.86
Dec 31, 2022 47.99% = 26.16% × 0.54 × 3.39
Dec 31, 2021 44.84% = 26.20% × 0.56 × 3.06
Dec 31, 2020 43.46% = 24.54% × 0.49 × 3.61
Dec 31, 2019 55.39% = 23.96% × 0.54 × 4.26

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The primary reason for the decrease in return on equity ratio (ROE) over 2023 year is the decrease in financial leverage ratio.

Five-Component Disaggregation of ROE

Zoetis Inc., decomposition of ROE

Microsoft Excel
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2023 46.91% = 0.80 × 0.92 × 37.21% × 0.60 × 2.86
Dec 31, 2022 47.99% = 0.80 × 0.92 × 35.64% × 0.54 × 3.39
Dec 31, 2021 44.84% = 0.82 × 0.92 × 34.92% × 0.56 × 3.06
Dec 31, 2020 43.46% = 0.82 × 0.90 × 33.39% × 0.49 × 3.61
Dec 31, 2019 55.39% = 0.83 × 0.89 × 32.33% × 0.54 × 4.26

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The primary reason for the decrease in return on equity ratio (ROE) over 2023 year is the decrease in financial leverage ratio.

Two-Component Disaggregation of ROA

Zoetis Inc., decomposition of ROA

Microsoft Excel
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2023 16.41% = 27.43% × 0.60
Dec 31, 2022 14.16% = 26.16% × 0.54
Dec 31, 2021 14.65% = 26.20% × 0.56
Dec 31, 2020 12.04% = 24.54% × 0.49
Dec 31, 2019 12.99% = 23.96% × 0.54

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2023 year is the increase in asset turnover ratio.

Four-Component Disaggregation of ROA

Zoetis Inc., decomposition of ROA

Microsoft Excel
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2023 16.41% = 0.80 × 0.92 × 37.21% × 0.60
Dec 31, 2022 14.16% = 0.80 × 0.92 × 35.64% × 0.54
Dec 31, 2021 14.65% = 0.82 × 0.92 × 34.92% × 0.56
Dec 31, 2020 12.04% = 0.82 × 0.90 × 33.39% × 0.49
Dec 31, 2019 12.99% = 0.83 × 0.89 × 32.33% × 0.54

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2023 year is the increase in efficiency measured by asset turnover ratio.

Disaggregation of Net Profit Margin

Zoetis Inc., decomposition of net profit margin ratio

Microsoft Excel
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2023 27.43% = 0.80 × 0.92 × 37.21%
Dec 31, 2022 26.16% = 0.80 × 0.92 × 35.64%
Dec 31, 2021 26.20% = 0.82 × 0.92 × 34.92%
Dec 31, 2020 24.54% = 0.82 × 0.90 × 33.39%
Dec 31, 2019 23.96% = 0.83 × 0.89 × 32.33%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The primary reason for the increase in net profit margin ratio over 2023 year is the increase in operating profitability measured by EBIT margin ratio.