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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Two-Component Disaggregation of ROE
Arista Networks Inc., 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: 2024-03-31), 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 Return on Assets shows a clear upward trend starting from March 31, 2020, where data first became available at 13.39%. This figure steadily increased over subsequent quarters, reaching a peak of 21.69% by December 31, 2024. After this peak, ROA experienced a slight decline, settling around 20.86% by March 31, 2025. Overall, the ROA demonstrates significant improvement in asset efficiency over the analyzed period.
- Financial Leverage
- Financial leverage remained relatively stable throughout the entire timeframe. Initial values in early 2020 hovered around 1.43 to 1.44 and showed minimal fluctuation. Slight decreases were observed starting from the end of 2021, dipping to as low as 1.34 by June 30, 2024, before marginally increasing again to 1.43 by March 31, 2025. This stability indicates a consistent capital structure with modest adjustments.
- Return on Equity (ROE)
- The Return on Equity followed an increasing trajectory similar to ROA, beginning at 19.11% at the first reported quarter. This ratio showed continuous improvement, reaching and maintaining levels close to or above 29% from mid-2023 through early 2025. The highest point recorded was 29.93% at March 31, 2025. The sustained growth in ROE signals effective management of shareholder equity and profitability over time.
Three-Component Disaggregation of ROE
Arista Networks Inc., 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: 2024-03-31), 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
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The net profit margin exhibits a clear upward trajectory from March 31, 2020, through March 31, 2025. Starting at approximately 27.38% in early 2020, it gradually increased to 40.72% by the end of the forecasted period. This consistent growth reflects improved profitability and efficiency in converting revenues into net income over the observed quarters.
- Asset Turnover
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Asset turnover showed an initial increase from 0.49 to a peak near 0.65 during the quarters spanning late 2021 to early 2023, indicating enhanced utilization of assets to generate sales. However, from that peak, there is a noticeable decline, with the ratio decreasing to approximately 0.50 by March 2025. This suggests a reduced efficiency in asset usage in the latter periods, potentially signaling either slower sales growth relative to asset base or growth in asset investments not yet translating into proportionate revenue.
- Financial Leverage
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Financial leverage remained relatively stable throughout the entire period, fluctuating slightly between 1.38 and 1.47. The modest variation implies a consistent capital structure with limited changes in the extent of debt or equity financing. Stability in this ratio suggests controlled risk related to leverage and steady financing policies.
- Return on Equity (ROE)
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Return on equity increased significantly from 19.11% in mid-2020 to a high of around 29.93% by early 2025. This upward movement signals improved effectiveness in generating profits from shareholders' equity. Although the ROE experienced some minor fluctuations late in the period, the overall trend is positive, reflecting the company's ability to enhance shareholder value consistently over these quarters.
Two-Component Disaggregation of ROA
Arista Networks Inc., 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: 2024-03-31), 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 consistent upward trend starting from 27.38% in March 2021 and increasing steadily each quarter. By March 2025, it reaches approximately 40.72%, indicating improving profitability and better cost control over time. The margin growth accelerates particularly from mid-2022 onward, suggesting enhanced operational efficiency or favorable market conditions contributing to higher profit retention relative to revenue.
- Asset Turnover
- Asset turnover initially rises from 0.49 in March 2021 to a peak of 0.65 in December 2022, reflecting increased efficiency in generating sales from assets during this period. However, after this peak, the ratio gradually declines, reaching approximately 0.51 by March 2025. This decline may indicate either slower revenue growth relative to asset base expansion or a buildup of assets that are not yet fully productive.
- Return on Assets (ROA)
- ROA follows an overall positive trend, increasing from 13.39% in March 2021 to a high of about 21.69% in June 2024. After this peak, it experiences a slight decline, stabilizing around 20.31% to 20.86% by early 2025. The rising ROA up to mid-2024 suggests enhancing overall asset profitability, driven by both improving net profit margins and asset utilization, while the subsequent minor decrease may reflect the softer asset turnover seen in the later quarters.