Stock Analysis on Net
Stock Analysis on Net

Illinois Tool Works Inc. (NYSE:ITW)

This company has been moved to the archive! The financial data has not been updated since February 11, 2022.

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

Illinois Tool Works Inc., decomposition of ROE

Microsoft Excel
ROE = ROA × Financial Leverage
Dec 31, 2021 74.32% = 16.76% × 4.44
Dec 31, 2020 66.30% = 13.51% × 4.91
Dec 31, 2019 83.31% = 16.73% × 4.98
Dec 31, 2018 78.76% = 17.24% × 4.57
Dec 31, 2017 36.79% = 10.05% × 3.66

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

Illinois Tool Works Inc., decomposition of ROE

Microsoft Excel
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2021 74.32% = 18.64% × 0.90 × 4.44
Dec 31, 2020 66.30% = 16.77% × 0.81 × 4.91
Dec 31, 2019 83.31% = 17.87% × 0.94 × 4.98
Dec 31, 2018 78.76% = 17.36% × 0.99 × 4.57
Dec 31, 2017 36.79% = 11.79% × 0.85 × 3.66

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

Illinois Tool Works Inc., decomposition of ROE

Microsoft Excel
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2021 74.32% = 0.81 × 0.94 × 24.41% × 0.90 × 4.44
Dec 31, 2020 66.30% = 0.78 × 0.93 × 23.14% × 0.81 × 4.91
Dec 31, 2019 83.31% = 0.77 × 0.94 × 24.87% × 0.94 × 4.98
Dec 31, 2018 78.76% = 0.76 × 0.93 × 24.72% × 0.99 × 4.57
Dec 31, 2017 36.79% = 0.52 × 0.93 × 24.66% × 0.85 × 3.66

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

Illinois Tool Works Inc., decomposition of ROA

Microsoft Excel
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2021 16.76% = 18.64% × 0.90
Dec 31, 2020 13.51% = 16.77% × 0.81
Dec 31, 2019 16.73% = 17.87% × 0.94
Dec 31, 2018 17.24% = 17.36% × 0.99
Dec 31, 2017 10.05% = 11.79% × 0.85

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

Illinois Tool Works Inc., decomposition of ROA

Microsoft Excel
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2021 16.76% = 0.81 × 0.94 × 24.41% × 0.90
Dec 31, 2020 13.51% = 0.78 × 0.93 × 23.14% × 0.81
Dec 31, 2019 16.73% = 0.77 × 0.94 × 24.87% × 0.94
Dec 31, 2018 17.24% = 0.76 × 0.93 × 24.72% × 0.99
Dec 31, 2017 10.05% = 0.52 × 0.93 × 24.66% × 0.85

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

Illinois Tool Works Inc., decomposition of net profit margin ratio

Microsoft Excel
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2021 18.64% = 0.81 × 0.94 × 24.41%
Dec 31, 2020 16.77% = 0.78 × 0.93 × 23.14%
Dec 31, 2019 17.87% = 0.77 × 0.94 × 24.87%
Dec 31, 2018 17.36% = 0.76 × 0.93 × 24.72%
Dec 31, 2017 11.79% = 0.52 × 0.93 × 24.66%

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.