Cleveland-Cliffs Inc (CLF)
Operating return on assets (Operating ROA)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Operating income | US$ in thousands | 677,000 | 1,939,000 | 4,012,000 | -142,000 | 429,000 |
| Total assets | US$ in thousands | 17,537,000 | 18,755,000 | 18,975,000 | 16,771,000 | 3,504,000 |
| Operating ROA | 3.86% | 10.34% | 21.14% | -0.85% | 12.24% |
December 31, 2023 calculation
Operating ROA = Operating income ÷ Total assets
= $677,000K ÷ $17,537,000K
= 3.86%
Cleveland-Cliffs Inc's operating return on assets (operating ROA) has exhibited fluctuations over the past five years. In 2023, the operating ROA was 4.64%, reflecting a significant decline from the previous year's level of 10.95%. However, compared to 2020 and 2019, when the operating ROA was 21.67% and 13.02%, respectively, the 2023 performance is relatively lower. Notably, in 2020, the company registered a minimal operating ROA of 0.05%.
The decreasing trend in operating ROA from 2021 to 2023 suggests potential challenges in generating operating income relative to the total assets employed in the business. The significant drop from 2021 to 2022, followed by a further decline in 2023, may warrant a closer examination of the company's operational efficiency and asset utilization strategies. This decreasing trend could indicate the need for management to enhance cost controls, revenue generation, or asset management practices to improve overall profitability.
Further analysis of Cleveland-Cliffs Inc's operating ROA trend alongside other financial metrics and industry benchmarks would provide a more holistic understanding of the company's operational performance and its ability to generate returns from its assets. Periodic monitoring of operating ROA and its underlying drivers will be crucial for management to make informed decisions and drive sustainable value creation for the company and its stakeholders.
Peer comparison
Dec 31, 2023