Decomposing ROE involves expressing net income divided by shareholders’ equity as the product of component ratios.
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Illinois Tool Works Inc. pages available for free this week:
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Analysis of Debt
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Two-Component Disaggregation of ROE
ROE | = | ROA | × | Financial Leverage | |
---|---|---|---|---|---|
Dec 31, 2021 | = | × | |||
Dec 31, 2020 | = | × | |||
Dec 31, 2019 | = | × | |||
Dec 31, 2018 | = | × | |||
Dec 31, 2017 | = | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The primary reason for the increase in return on equity ratio (ROE) over 2021 year is the increase in profitability measured by return on assets ratio (ROA).
Three-Component Disaggregation of ROE
ROE | = | Net Profit Margin | × | Asset Turnover | × | Financial Leverage | |
---|---|---|---|---|---|---|---|
Dec 31, 2021 | = | × | × | ||||
Dec 31, 2020 | = | × | × | ||||
Dec 31, 2019 | = | × | × | ||||
Dec 31, 2018 | = | × | × | ||||
Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The primary reason for the increase in return on equity ratio (ROE) over 2021 year is the increase in efficiency measured by asset turnover ratio.
Five-Component Disaggregation of ROE
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The primary reason for the increase in return on equity ratio (ROE) over 2021 year is the increase in efficiency measured by asset turnover ratio.
Two-Component Disaggregation of ROA
ROA | = | Net Profit Margin | × | Asset Turnover | |
---|---|---|---|---|---|
Dec 31, 2021 | = | × | |||
Dec 31, 2020 | = | × | |||
Dec 31, 2019 | = | × | |||
Dec 31, 2018 | = | × | |||
Dec 31, 2017 | = | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The primary reason for the increase in return on assets ratio (ROA) over 2021 year is the increase in asset turnover ratio.
Four-Component Disaggregation of ROA
ROA | = | Tax Burden | × | Interest Burden | × | EBIT Margin | × | Asset Turnover | |
---|---|---|---|---|---|---|---|---|---|
Dec 31, 2021 | = | × | × | × | |||||
Dec 31, 2020 | = | × | × | × | |||||
Dec 31, 2019 | = | × | × | × | |||||
Dec 31, 2018 | = | × | × | × | |||||
Dec 31, 2017 | = | × | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The primary reason for the increase in return on assets ratio (ROA) over 2021 year is the increase in efficiency measured by asset turnover ratio.
Disaggregation of Net Profit Margin
Net Profit Margin | = | Tax Burden | × | Interest Burden | × | EBIT Margin | |
---|---|---|---|---|---|---|---|
Dec 31, 2021 | = | × | × | ||||
Dec 31, 2020 | = | × | × | ||||
Dec 31, 2019 | = | × | × | ||||
Dec 31, 2018 | = | × | × | ||||
Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The primary reason for the increase in net profit margin ratio over 2021 year is the increase in operating profitability measured by EBIT margin ratio.