Stock Analysis on Net
Stock Analysis on Net

Synopsys Inc. (NASDAQ:SNPS)

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

Synopsys Inc., decomposition of ROE

Microsoft Excel
ROE = ROA × Financial Leverage
Oct 31, 2023 20.01% = 11.90% × 1.68
Oct 31, 2022 17.85% = 10.45% × 1.71
Oct 31, 2021 14.31% = 8.66% × 1.65
Oct 31, 2020 13.54% = 8.27% × 1.64
Oct 31, 2019 13.04% = 8.31% × 1.57
Oct 31, 2018 12.43% = 7.04% × 1.77

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

The primary reason for the increase in return on equity ratio (ROE) over 2023 year is the increase in profitability measured by return on assets ratio (ROA).

Three-Component Disaggregation of ROE

Synopsys Inc., decomposition of ROE

Microsoft Excel
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Oct 31, 2023 20.01% = 21.05% × 0.57 × 1.68
Oct 31, 2022 17.85% = 19.38% × 0.54 × 1.71
Oct 31, 2021 14.31% = 18.02% × 0.48 × 1.65
Oct 31, 2020 13.54% = 18.03% × 0.46 × 1.64
Oct 31, 2019 13.04% = 15.84% × 0.52 × 1.57
Oct 31, 2018 12.43% = 13.86% × 0.51 × 1.77

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

The primary reason for the increase in return on equity ratio (ROE) over 2023 year is the increase in profitability measured by net profit margin ratio.

Five-Component Disaggregation of ROE

Synopsys Inc., decomposition of ROE

Microsoft Excel
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Oct 31, 2023 20.01% = 0.94 × 1.00 × 22.50% × 0.57 × 1.68
Oct 31, 2022 17.85% = 0.88 × 1.00 × 22.11% × 0.54 × 1.71
Oct 31, 2021 14.31% = 0.94 × 1.00 × 19.27% × 0.48 × 1.65
Oct 31, 2020 13.54% = 1.04 × 0.99 × 17.48% × 0.46 × 1.64
Oct 31, 2019 13.04% = 0.98 × 0.98 × 16.58% × 0.52 × 1.57
Oct 31, 2018 12.43% = 1.19 × 0.96 × 12.15% × 0.51 × 1.77

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

The primary reason for the increase in return on equity ratio (ROE) over 2023 year is the increase in effect of taxes measured by tax burden ratio.

Two-Component Disaggregation of ROA

Synopsys Inc., decomposition of ROA

Microsoft Excel
ROA = Net Profit Margin × Asset Turnover
Oct 31, 2023 11.90% = 21.05% × 0.57
Oct 31, 2022 10.45% = 19.38% × 0.54
Oct 31, 2021 8.66% = 18.02% × 0.48
Oct 31, 2020 8.27% = 18.03% × 0.46
Oct 31, 2019 8.31% = 15.84% × 0.52
Oct 31, 2018 7.04% = 13.86% × 0.51

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

The primary reason for the increase in return on assets ratio (ROA) over 2023 year is the increase in profitability measured by net profit margin ratio.

Four-Component Disaggregation of ROA

Synopsys Inc., decomposition of ROA

Microsoft Excel
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Oct 31, 2023 11.90% = 0.94 × 1.00 × 22.50% × 0.57
Oct 31, 2022 10.45% = 0.88 × 1.00 × 22.11% × 0.54
Oct 31, 2021 8.66% = 0.94 × 1.00 × 19.27% × 0.48
Oct 31, 2020 8.27% = 1.04 × 0.99 × 17.48% × 0.46
Oct 31, 2019 8.31% = 0.98 × 0.98 × 16.58% × 0.52
Oct 31, 2018 7.04% = 1.19 × 0.96 × 12.15% × 0.51

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

The primary reason for the increase in return on assets ratio (ROA) over 2023 year is the increase in effect of taxes measured by tax burden ratio.

Disaggregation of Net Profit Margin

Synopsys Inc., decomposition of net profit margin ratio

Microsoft Excel
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Oct 31, 2023 21.05% = 0.94 × 1.00 × 22.50%
Oct 31, 2022 19.38% = 0.88 × 1.00 × 22.11%
Oct 31, 2021 18.02% = 0.94 × 1.00 × 19.27%
Oct 31, 2020 18.03% = 1.04 × 0.99 × 17.48%
Oct 31, 2019 15.84% = 0.98 × 0.98 × 16.58%
Oct 31, 2018 13.86% = 1.19 × 0.96 × 12.15%

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

The primary reason for the increase in net profit margin ratio over 2023 year is the increase in effect of taxes measured by tax burden ratio.