Archer-Daniels-Midland Company (ADM)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 6.76% | 8.00% | 7.43% | 7.02% | 6.92% |
| Operating profit margin | 2.42% | 4.32% | 5.59% | 4.43% | 4.21% |
| Pretax margin | 2.64% | 4.57% | 5.14% | 3.89% | 2.93% |
| Net profit margin | 2.10% | 3.71% | 4.26% | 3.18% | 2.75% |
Archer-Daniels-Midland Company's profitability ratios exhibit some fluctuations over the years as per the provided data.
The Gross Profit Margin, which represents the percentage of revenue retained as gross profit after accounting for the cost of goods sold, shows a positive trend from 6.92% in 2020 to 8.00% in 2023, indicating an improvement in the company's efficiency in generating profits from its core operations. However, there was a slight decline to 6.76% in 2024.
The Operating Profit Margin, depicting the percentage of revenue remaining as operating profit after deducting operating expenses, varied from 4.21% in 2020 to 5.59% in 2022. This metric then saw a decline to 2.42% in 2024, which may indicate challenges in controlling operational costs effectively.
The Pretax Margin, which shows the percentage of revenue that translates into pre-tax profit, increased from 2.93% in 2020 to 5.14% in 2022, reflecting improved overall profitability. However, it declined to 2.64% in 2024, possibly due to increased tax expenses or other factors affecting earnings.
The Net Profit Margin, indicating the percentage of revenue converted into net income, rose from 2.75% in 2020 to 4.26% in 2022, signaling enhanced profitability at the bottom line. Nevertheless, there was a decrease to 2.10% in 2024, suggesting potential challenges in controlling costs or generating higher net income.
Overall, while Archer-Daniels-Midland Company demonstrated an improvement in certain profitability margins over the years, there were fluctuations in others, indicating the need for ongoing monitoring and strategic adjustments to sustain and enhance profitability levels.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 3.89% | 7.43% | 9.53% | 6.73% | 5.45% |
| Return on assets (ROA) | 3.38% | 6.38% | 7.26% | 4.83% | 3.56% |
| Return on total capital | 13.36% | 20.50% | 23.22% | 16.00% | 11.02% |
| Return on equity (ROE) | 8.12% | 14.43% | 17.87% | 12.05% | 8.86% |
Archer-Daniels-Midland Company's profitability ratios show a positive trend over the years, indicating improving financial performance.
1. Operating Return on Assets (Operating ROA) demonstrates the company's ability to generate operating income from its assets. From 2020 to 2024, the Operating ROA increased steadily from 5.45% to 9.53%, with a slight dip in 2024 to 3.89%.
2. Return on Assets (ROA) measures the company's overall profitability by evaluating its ability to generate earnings from its total assets. The ROA also shows an upward trend, rising from 3.56% in 2020 to 6.38% in 2023 before declining slightly to 3.38% in 2024.
3. Return on Total Capital indicates the return generated from all capital invested in the business. This ratio improved significantly over the period, starting at 11.02% in 2020 and reaching a peak of 23.22% in 2022, before decreasing to 13.36% in 2024.
4. Return on Equity (ROE) reflects the return earned on shareholders' equity. The ROE followed a similar pattern to the other ratios, increasing from 8.86% in 2020 to a peak of 17.87% in 2022, then declining to 8.12% in 2024.
Overall, Archer-Daniels-Midland Company has shown consistent growth in profitability, with varying degrees of performance across different profitability metrics. The company's strong profitability ratios suggest efficient asset utilization and effective capital management strategies.