DuPont Decomposition
Why does AARON earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
19.2% = 10.6% × 0.94 × 1.92
Latest: FY2025
Profitability
Net Margin
10.6%
9.7% →10.6%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.94x
1.44x →0.94x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.92x
1.89x →1.92x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 7.2 pp over 3 years. Driven by asset turnover declining (1.44x → 0.94x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 9.7% | 1.44 | 1.89 | 26.4% |
| FY2024 | ₹0Cr | ₹0Cr | 10.0% | 0.85 | 2.08 | 17.7% |
| FY2025 | ₹0Cr | ₹0Cr | 10.6% | 0.94 | 1.92 | 19.2% |
How to read DuPont
- • Rising ROE from margin = pricing power, operational improvement (good)
- • Rising ROE from turnover = better asset utilization (good)
- • Rising ROE from leverage = more debt, amplified risk (caution)
- • Falling ROE across all three = structural deterioration (red flag)
DuPont decomposition from audited annual financials. Factual analysis, not investment advice.