Broadcom Inc (AVGO)

Operating return on assets (Operating ROA)

		Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Nov 1, 2020	Nov 3, 2019
Operating income	US$ in thousands	16,207,000	14,225,000	8,519,000	4,014,000	3,444,000
Total assets	US$ in thousands	72,861,000	73,249,000	75,570,000	75,933,000	67,493,000
Operating ROA		22.24%	19.42%	11.27%	5.29%	5.10%

October 29, 2023 calculation

Operating ROA = Operating income ÷ Total assets
= $16,207,000K ÷ $72,861,000K
= 22.24%

Operating return on assets (Operating ROA) is a key financial ratio that indicates how effectively a company is utilizing its assets to generate operating profits. It is calculated by dividing operating income by average total assets. Analyzing the trend of Broadcom Inc's Operating ROA from November 3, 2019, to October 29, 2023, provides valuable insights into the company's operational efficiency and profitability.

Broadcom Inc's Operating ROA has shown a consistent upward trend over the past five years, increasing from 6.31% in 2019 to 22.58% in 2023. This upward trend indicates that the company has been increasingly efficient in generating operating profits relative to its total assets. The significant improvement in Operating ROA implies that Broadcom Inc has been effectively utilizing its assets to generate higher operating income, which is a positive indicator for the company's operational performance.

The continuous improvement in Operating ROA reflects favorable operating efficiency and effective asset management by Broadcom Inc. It suggests that the company has been able to optimize the utilization of its assets over the years, resulting in higher operational profitability. This trend is indicative of strong operational performance and effective utilization of resources, which are critical factors for long-term sustainable growth and success.

In conclusion, the consistent increase in Broadcom Inc's Operating ROA demonstrates the company's ability to generate higher operating profits relative to its asset base. This trend reflects well on the company's operational efficiency and effective management of assets, which are essential for delivering sustained value to shareholders and stakeholders.