Dupont Analysis

  • ROE has been improving since 2008.
  • In 21011 it still just represents 60% of the ROE recorded in 2007.

ROA had the same behaviour as ROE, since self-financing capacity has remained little changed around 70%. This means that return on equity is being driven by a return on asset of 16% levered.

When compared to its peers, Crocs shows good number of return and leverage.

Breaking down ROA we understand that operational efficiency is the main contributor to return as profitability (despite increasing) is very low (11%). Neverthless Net Margin is the 2nd largest of the sample, while asset turnover is bellow average. Notice that about half of the companies in the sample are pure retailers and so asset turnover will be extremely high.


With this simple Dupont analysis one can breakdown return on equity in three main parts: Profitability, Efficiency and Leverage. In this case, there's some balance between profitability and leverage, but the major driver is definitely operational efficiency. In a dynamic perspective, i'd say the net margin will be the critical indicator to improve ROE since asset turnover and equity/assets haven't changed so much over time.


Tópico: Dupont Analysis

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