Avista Corporation (AVA)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 58.82% | 59.90% | 56.97% | 65.45% | 69.85% |
| Operating profit margin | 15.79% | 14.71% | 11.12% | 15.86% | 17.60% |
| Pretax margin | 9.44% | 7.85% | 8.07% | 11.08% | 10.33% |
| Net profit margin | 9.29% | 9.77% | 9.07% | 10.24% | 9.80% |
Avista Corporation's profitability ratios indicate a fluctuating trend over the past five years. The gross profit margin, which reflects the company's ability to generate revenue after accounting for the cost of goods sold, decreased from 69.85% in 2020 to 58.82% in 2024, showing a decline in operational efficiency.
Similarly, the operating profit margin, a measure of earnings before interest and taxes, decreased from 17.60% in 2020 to 15.79% in 2024, indicating a reduction in profitability from core operations.
The pretax margin, representing the proportion of income before taxes to total revenue, fluctuated between 8.07% and 11.08% over the five-year period, with a slight increase in 2021 followed by a decline in subsequent years.
The net profit margin, which shows the percentage of revenue that translates into net income, fluctuated between 9.07% and 10.24% during the same period, suggesting relatively stable profitability levels despite some variability.
Overall, Avista Corporation's profitability ratios demonstrate a mixed performance with decreasing gross and operating profit margins, while the net profit margin remained relatively steady, indicating a need for the company to focus on improving operational efficiencies to enhance overall profitability in the future.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 3.85% | 3.35% | 2.56% | 3.33% | 3.63% |
| Return on assets (ROA) | 2.27% | 2.22% | 2.09% | 2.15% | 2.02% |
| Return on total capital | 12.66% | 11.15% | 8.28% | 10.53% | 11.15% |
| Return on equity (ROE) | 6.95% | 6.89% | 6.65% | 6.84% | 6.38% |
Based on the provided data for Avista Corporation, we can analyze the profitability ratios as follows:
1. Operating Return on Assets (Operating ROA):
- The Operating ROA indicates the profitability of the company's core operations. Avista Corporation's Operating ROA has shown a slight decline from 3.63% in 2020 to 2.56% in 2022, before recovering to 3.85% in 2024. This measure suggests that the company's operational efficiency and asset utilization fluctuated over the period.
2. Return on Assets (ROA):
- The ROA measures the overall efficiency in generating profit from its assets. Avista Corporation's ROA has remained relatively stable, ranging from 2.02% in 2020 to 2.27% in 2024. This indicates that the company has been effectively utilizing its assets to generate earnings over the years.
3. Return on Total Capital:
- The Return on Total Capital reflects the returns generated from the total capital employed in the business. Avista Corporation experienced fluctuations in this ratio, with a decrease from 11.15% in 2020 to 8.28% in 2022, followed by an increase to 12.66% in 2024. This variability suggests changes in the company's capital structure and profitability levels.
4. Return on Equity (ROE):
- The ROE measures the return generated for shareholders' equity investment. Avista Corporation's ROE has shown relatively consistent performance, ranging from 6.38% in 2020 to 6.95% in 2024. This indicates that the company has been able to generate a stable return for its equity holders over the years.
In summary, Avista Corporation's profitability ratios reflect varying levels of operational efficiency, asset utilization, and returns to shareholders over the period under consideration. It is important for the company to continue monitoring and improving these ratios to ensure sustainable profitability and value creation for its stakeholders.