Stock Analysis on Net
Stock Analysis on Net

Reynolds American Inc. (NYSE:RAI)

This company has been moved to the archive! The financial data has not been updated since May 3, 2017.

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

Reynolds American Inc., decomposition of ROE

Microsoft Excel
ROE = ROA × Financial Leverage
Dec 31, 2016 27.97% = 11.89% × 2.35
Dec 31, 2015 17.82% = 6.11% × 2.92
Dec 31, 2014 32.51% = 9.67% × 3.36
Dec 31, 2013 33.25% = 11.15% × 2.98
Dec 31, 2012 24.20% = 7.68% × 3.15

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

The primary reason for the increase in return on equity ratio (ROE) over 2016 year is the increase in profitability measured by return on assets ratio (ROA).

Three-Component Disaggregation of ROE

Reynolds American Inc., decomposition of ROE

Microsoft Excel
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2016 27.97% = 36.05% × 0.33 × 2.35
Dec 31, 2015 17.82% = 21.86% × 0.28 × 2.92
Dec 31, 2014 32.51% = 12.15% × 0.80 × 3.36
Dec 31, 2013 33.25% = 14.36% × 0.78 × 2.98
Dec 31, 2012 24.20% = 10.40% × 0.74 × 3.15

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

The primary reason for the increase in return on equity ratio (ROE) over 2016 year is the increase in profitability measured by net profit margin ratio.

Five-Component Disaggregation of ROE

Reynolds American Inc., decomposition of ROE

Microsoft Excel
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2016 27.97% = 0.63 × 0.94 × 61.24% × 0.33 × 2.35
Dec 31, 2015 17.82% = 0.51 × 0.92 × 46.72% × 0.28 × 2.92
Dec 31, 2014 32.51% = 0.64 × 0.89 × 21.27% × 0.80 × 3.36
Dec 31, 2013 33.25% = 0.63 × 0.91 × 25.07% × 0.78 × 2.98
Dec 31, 2012 24.20% = 0.65 × 0.89 × 17.89% × 0.74 × 3.15

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

The primary reason for the increase in return on equity ratio (ROE) over 2016 year is the increase in operating profitability measured by EBIT margin ratio.

Two-Component Disaggregation of ROA

Reynolds American Inc., decomposition of ROA

Microsoft Excel
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2016 11.89% = 36.05% × 0.33
Dec 31, 2015 6.11% = 21.86% × 0.28
Dec 31, 2014 9.67% = 12.15% × 0.80
Dec 31, 2013 11.15% = 14.36% × 0.78
Dec 31, 2012 7.68% = 10.40% × 0.74

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2016 year is the increase in profitability measured by net profit margin ratio.

Four-Component Disaggregation of ROA

Reynolds American Inc., decomposition of ROA

Microsoft Excel
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2016 11.89% = 0.63 × 0.94 × 61.24% × 0.33
Dec 31, 2015 6.11% = 0.51 × 0.92 × 46.72% × 0.28
Dec 31, 2014 9.67% = 0.64 × 0.89 × 21.27% × 0.80
Dec 31, 2013 11.15% = 0.63 × 0.91 × 25.07% × 0.78
Dec 31, 2012 7.68% = 0.65 × 0.89 × 17.89% × 0.74

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2016 year is the increase in operating profitability measured by EBIT margin ratio.

Disaggregation of Net Profit Margin

Reynolds American Inc., decomposition of net profit margin ratio

Microsoft Excel
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2016 36.05% = 0.63 × 0.94 × 61.24%
Dec 31, 2015 21.86% = 0.51 × 0.92 × 46.72%
Dec 31, 2014 12.15% = 0.64 × 0.89 × 21.27%
Dec 31, 2013 14.36% = 0.63 × 0.91 × 25.07%
Dec 31, 2012 10.40% = 0.65 × 0.89 × 17.89%

Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).

The primary reason for the increase in net profit margin ratio over 2016 year is the increase in operating profitability measured by EBIT margin ratio.