Compass Minerals International Inc (CMP)

Operating return on assets (Operating ROA)

		Sep 30, 2023	Sep 30, 2022	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Operating income	US$ in thousands	79,100	42,900	103,000	163,600	130,300
Total assets	US$ in thousands	1,816,900	1,643,500	2,261,500	2,443,200	2,367,900
Operating ROA		4.35%	2.61%	4.55%	6.70%	5.50%

September 30, 2023 calculation

Operating ROA = Operating income ÷ Total assets
= $79,100K ÷ $1,816,900K
= 4.35%

To analyze Compass Minerals International Inc's operating return on assets (operating ROA) over the years, let's start by defining operating ROA. The operating return on assets is a financial ratio that measures a company's operating income generated for each dollar of assets it owns. It provides insight into how efficiently a company is utilizing its assets to generate operating profits.

Looking at the data provided, we can see the trend in Compass Minerals International Inc's operating ROA over the past five years. In 2018, the operating ROA was at 5.50%, and it increased to 6.70% in 2019, indicating an improvement in the company's operating efficiency in utilizing its assets to generate operating income. However, in 2020, there was a decrease to 4.55%, showing a decline in the operating efficiency of the company.

Analyzing further, the operating ROA continued to decrease to 2.29% in 2022, indicating a significant drop in operating efficiency compared to previous years. However, it bounced back to 4.18% in 2023, showing some recovery in the company's operating efficiency in utilizing its assets to generate operating income.

It is important to note that a high operating ROA indicates efficient use of assets to generate income, while a low operating ROA could indicate inefficiency in asset utilization. Therefore, the fluctuations in Compass Minerals International Inc's operating ROA over the years suggest varying levels of operational efficiency and effectiveness in generating income from its assets.

In summary, the analysis of Compass Minerals International Inc's operating ROA indicates fluctuations in its operating efficiency over the years, with a peak in 2019 followed by a decline and subsequent recovery in 2023. This highlights the importance of continually monitoring and assessing a company's operating efficiency and asset utilization to drive sustainable financial performance.