Stock Analysis on Net
Stock Analysis on Net

Caterpillar Inc. (NYSE:CAT)

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

Caterpillar Inc., decomposition of ROE

Microsoft Excel
ROE = ROA × Financial Leverage
Dec 31, 2023 53.02% = 11.81% × 4.49
Dec 31, 2022 42.25% = 8.18% × 5.16
Dec 31, 2021 39.37% = 7.84% × 5.02
Dec 31, 2020 19.56% = 3.83% × 5.11
Dec 31, 2019 41.77% = 7.77% × 5.38

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

Three-Component Disaggregation of ROE

Caterpillar Inc., decomposition of ROE

Microsoft Excel
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2023 53.02% = 16.18% × 0.73 × 4.49
Dec 31, 2022 42.25% = 11.85% × 0.69 × 5.16
Dec 31, 2021 39.37% = 13.47% × 0.58 × 5.02
Dec 31, 2020 19.56% = 7.68% × 0.50 × 5.11
Dec 31, 2019 41.77% = 12.00% × 0.65 × 5.38

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 equity ratio (ROE) over 2023 year is the increase in profitability measured by net profit margin ratio.

Five-Component Disaggregation of ROE

Caterpillar Inc., decomposition of ROE

Microsoft Excel
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2023 53.02% = 0.79 × 0.96 × 21.34% × 0.73 × 4.49
Dec 31, 2022 42.25% = 0.76 × 0.95 × 16.29% × 0.69 × 5.16
Dec 31, 2021 39.37% = 0.79 × 0.94 × 18.09% × 0.58 × 5.02
Dec 31, 2020 19.56% = 0.75 × 0.89 × 11.58% × 0.50 × 5.11
Dec 31, 2019 41.77% = 0.78 × 0.95 × 16.27% × 0.65 × 5.38

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 equity ratio (ROE) over 2023 year is the increase in operating profitability measured by EBIT margin ratio.

Two-Component Disaggregation of ROA

Caterpillar Inc., decomposition of ROA

Microsoft Excel
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2023 11.81% = 16.18% × 0.73
Dec 31, 2022 8.18% = 11.85% × 0.69
Dec 31, 2021 7.84% = 13.47% × 0.58
Dec 31, 2020 3.83% = 7.68% × 0.50
Dec 31, 2019 7.77% = 12.00% × 0.65

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 profitability measured by net profit margin ratio.

Four-Component Disaggregation of ROA

Caterpillar Inc., decomposition of ROA

Microsoft Excel
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2023 11.81% = 0.79 × 0.96 × 21.34% × 0.73
Dec 31, 2022 8.18% = 0.76 × 0.95 × 16.29% × 0.69
Dec 31, 2021 7.84% = 0.79 × 0.94 × 18.09% × 0.58
Dec 31, 2020 3.83% = 0.75 × 0.89 × 11.58% × 0.50
Dec 31, 2019 7.77% = 0.78 × 0.95 × 16.27% × 0.65

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 operating profitability measured by EBIT margin ratio.

Disaggregation of Net Profit Margin

Caterpillar Inc., decomposition of net profit margin ratio

Microsoft Excel
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2023 16.18% = 0.79 × 0.96 × 21.34%
Dec 31, 2022 11.85% = 0.76 × 0.95 × 16.29%
Dec 31, 2021 13.47% = 0.79 × 0.94 × 18.09%
Dec 31, 2020 7.68% = 0.75 × 0.89 × 11.58%
Dec 31, 2019 12.00% = 0.78 × 0.95 × 16.27%

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.