DuPont Decomposition
Why does TERASOFT earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
7.7% = 8.8% × 0.50 × 1.74
Latest: FY2025
Profitability
Net Margin
8.8%
7.7% →8.8%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.50x
0.23x →0.50x
Revenue per ₹ of assets
Leverage
Equity Multiplier
1.74x
1.83x →1.74x
Assets funded by equity vs debt
Trend Analysis
ROE improved by 4.4 pp over 3 years. Driven by net margin improving (7.7% → 8.8%), asset turnover improving (0.23x → 0.50x).
Historical Decomposition
Last 3 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2023 | ₹0Cr | ₹0Cr | 7.7% | 0.23 | 1.83 | 3.3% |
| FY2024 | ₹0Cr | ₹0Cr | 7.4% | 0.11 | 1.84 | 1.5% |
| FY2025 | ₹0Cr | ₹0Cr | 8.8% | 0.50 | 1.74 | 7.7% |
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.