Choice Hotels International Inc (CHH)

Operating return on assets (Operating ROA)

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Operating income (ttm)	US$ in thousands	375,028	414,119	424,095	457,055	478,601	508,569	522,657	484,332	428,933	338,425	230,019	118,884	121,668	174,006	225,726	320,374	318,642	302,048	310,796	317,275
Total assets	US$ in thousands	2,394,800	2,232,240	2,150,320	2,106,220	2,102,180	2,188,980	2,076,840	1,972,030	1,931,820	1,865,930	1,728,790	1,584,140	1,587,330	1,570,150	1,686,040	1,703,950	1,386,670	1,374,260	1,214,280	1,173,820
Operating ROA		15.66%	18.55%	19.72%	21.70%	22.77%	23.23%	25.17%	24.56%	22.20%	18.14%	13.31%	7.50%	7.66%	11.08%	13.39%	18.80%	22.98%	21.98%	25.60%	27.03%

December 31, 2023 calculation

Operating ROA = Operating income (ttm) ÷ Total assets
= $375,028K ÷ $2,394,800K
= 15.66%

Choice Hotels International Inc's operating return on assets (operating ROA) has exhibited variations over the past five quarters. The trend shows a general increase in the operating ROA from 15.66% in December 2021 to a peak of 25.17% in June 2022, followed by a slight decline in the subsequent quarter. However, significant volatility is observed, with the operating ROA fluctuating between 7.50% and 25.17% over this time frame.

The average operating ROA for the period under consideration is approximately 18.75%, indicating the company generates $0.1875 in operating income for every dollar of assets employed. The highest operating ROA of 27.03% was recorded in the second quarter of 2019, while the lowest was seen in the first quarter of 2021 at 7.50%.

The upward trend in operating ROA from 15.66% in December 2021 to a peak of 25.17% in June 2022 suggests an improvement in the company's operational efficiency and effectiveness in generating profits relative to its asset base. However, the subsequent fluctuations indicate potential challenges or volatility in the business environment impacting profitability. A declining trend from June 2022 to March 2023 followed by an increase in the latest quarter (December 2023) could indicate a need for further analysis to understand the underlying drivers of performance.

Overall, the varying operating ROA indicates that management and investors should continue monitoring the company's operational efficiency and asset utilization to ensure sustained profitability and return on investment.