DuPont Decomposition
Why does PARKHOSPS earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
18.2% = 14.7% × 0.65 × 1.89
Latest: FY2025
Profitability
Net Margin
14.7%
17.5% →14.7%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.65x
0.79x →0.65x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.89x
2.18x →1.89x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 11.9 pp over 3 years. Driven by net margin declining (17.5% → 14.7%), asset turnover declining (0.79x → 0.65x), leverage falling (2.18x → 1.89x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 17.5% | 0.79 | 2.18 | 30.1% |
| FY2024 | ₹0Cr | ₹0Cr | 12.5% | 0.64 | 2.04 | 16.4% |
| FY2025 | ₹0Cr | ₹0Cr | 14.7% | 0.65 | 1.89 | 18.2% |
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.