DuPont Decomposition
Why does BCG earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
8.2% = 13.8% × 0.53 × 1.13
Latest: FY2025
Profitability
Net Margin
13.8%
18.2% →13.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.53x
0.84x →0.53x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.13x
1.12x →1.13x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 9.1 pp over 4 years. Driven by net margin declining (18.2% → 13.8%), asset turnover declining (0.84x → 0.53x).
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 18.2% | 0.84 | 1.12 | 17.2% |
| FY2023 | ₹0Cr | ₹0Cr | 18.5% | 0.94 | 1.13 | 19.6% |
| FY2024 | ₹0Cr | ₹0Cr | 14.8% | 0.53 | 1.13 | 8.8% |
| FY2025 | ₹0Cr | ₹0Cr | 13.8% | 0.53 | 1.13 | 8.2% |
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.