DuPont Decomposition
Why does SOUTHWEST earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
9.6% = 9.1% × 0.65 × 1.62
Latest: FY2025
Profitability
Net Margin
9.1%
9.8% →9.1%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.65x
0.19x →0.65x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.62x
1.74x →1.62x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 6.4 pp over 3 years. Driven by asset turnover improving (0.19x → 0.65x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 9.8% | 0.19 | 1.74 | 3.3% |
| FY2024 | ₹0Cr | ₹0Cr | 7.5% | 0.19 | 1.93 | 2.8% |
| FY2025 | ₹0Cr | ₹0Cr | 9.1% | 0.65 | 1.62 | 9.6% |
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.