REO Decomposition (DuPont Analysis) via Bloomberg
To launch the Bloomberg application you must have an ID &
Password. To create an ID please ask an ETC Lab Assistant. The
process requires that you have a cell phone and will take about 10
minutes to complete. Alternatively, you can access a guide to
creating your Bloomberg ID through the following url:
http://www.lerner.udel.edu/etc/pdf/Bloomberg%20Registration.pdf
Bloomberg provides an extended DuPont Analysis in which ROE is
divided into the five following components:
1)
2)
3)
4)
5)
Tax Burden = (100% - Income Tax/EBT)
Interest Burden = (EBT/EBIT)
EBIT Margin = EBIT/Sales
Asset Turnover = Sales/Assets
Financial Leverage = Assets/Common Equity
The following slides explain the steps to get to the REO Decomposition
for a company. The example is for Apple Inc. (ticker: AAPL)
Assuming you have successfully logged into Bloomberg, place the cursor in the upper left
corner of either monitor. Enter the ticker for the company you wish to research followed by the
F8 Key (Equity) and hit enter. You will see the following screen:
Select “Financial Analysis” under Option 3. You will see the following screen. From this screen
you will select Option 7 “ROE Decomposition”
Once you are in the “ROE Decomposition” Screen you can customize your view. Try switching
view from “Table” to “Charts” or change your period. If you want to download data to Excel,
click on the Red Toolbar “Options” and chose “Excel Download”
If you left click on any of the analytic s (i.e. Tax Burden, Interest Burden, EBIT Margin, etc) you
get the options for Graph, Definition, or Data Transparency. If you select Data Transparency
and then select a timeframe, you can view the Bloomberg Calculation and can drill down
further to determine where they get their data from. Keep drilling down and eventually you
will be linked into the actual line item on your company ‘s financial statement.
If you have questions regarding any screen in Bloomberg, hit the green Help Key (upper left on
Keyboard). Bloomberg will provide a detailed explanation of all data on that particular screen.
Use the green “page up” and “page down” buttons to move through the help guide. Use the
green “menu” key to get back.