CVS Health Corp (CVS)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | -18.29% | -10.24% | -7.01% | -5.53% | -3.79% |
| Operating profit margin | 2.28% | 3.84% | 2.47% | 4.52% | 5.18% |
| Pretax margin | 1.66% | 3.12% | 1.74% | 3.57% | 3.63% |
| Net profit margin | 1.24% | 2.33% | 1.34% | 2.71% | 2.67% |
The profitability ratios of CVS Health Corp have shown a downward trend over the years.
1. Gross Profit Margin: The company's gross profit margin has decreased from -3.79% in 2020 to -18.29% in 2024. This indicates that the company's cost of goods sold as a percentage of revenue has been increasing, leading to a lower gross profit margin.
2. Operating Profit Margin: CVS Health Corp's operating profit margin has also declined from 5.18% in 2020 to 2.28% in 2024. This suggests that the company's operating expenses relative to revenue have been growing, resulting in a reduction in operating profit margin.
3. Pretax Margin: The pretax margin of the company decreased from 3.63% in 2020 to 1.66% in 2024. This indicates that CVS Health Corp's pre-tax income as a percentage of revenue has been shrinking, potentially due to higher expenses or lower revenue.
4. Net Profit Margin: The net profit margin has shown a similar downward trend, dropping from 2.67% in 2020 to 1.24% in 2024. This signifies that the company's net income as a percentage of revenue has been decreasing over the years.
Overall, the declining trend in these profitability ratios raises concerns about CVS Health Corp's efficiency in managing its costs and generating profits. Investors and stakeholders may need to closely monitor the company's financial performance and strategies to address the profitability challenges.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 3.36% | 5.50% | 3.48% | 5.66% | 6.03% |
| Return on assets (ROA) | 1.82% | 3.34% | 1.89% | 3.39% | 3.11% |
| Return on total capital | 11.27% | 18.06% | 11.05% | 17.23% | 18.24% |
| Return on equity (ROE) | 6.11% | 10.91% | 6.03% | 10.54% | 10.35% |
Based on the provided data, the profitability ratios of CVS Health Corp can be analyzed as follows:
1. Operating Return on Assets (Operating ROA):
- The Operating ROA shows the efficiency of the company in generating operating income from its assets.
- In December 2020, the Operating ROA was 6.03%, which decreased to 5.66% by December 2021. It further decreased to 3.48% by December 2022 but showed an improvement to 5.50% by December 2023. However, it declined again to 3.36% by December 2024.
2. Return on Assets (ROA):
- ROA indicates the company's profitability in relation to its total assets.
- The ROA was 3.11% in December 2020, increased to 3.39% by December 2021, then decreased to 1.89% by December 2022. It improved to 3.34% in December 2023 but decreased again to 1.82% by December 2024.
3. Return on Total Capital:
- This ratio measures the return the company generates on all its capital, including debt and equity.
- In December 2020, the Return on Total Capital was 18.24%, which decreased to 17.23% by December 2021. It further dropped to 11.05% by December 2022, then increased to 18.06% by December 2023 but declined to 11.27% by December 2024.
4. Return on Equity (ROE):
- ROE reflects the return the company generates on the shareholders' equity.
- The ROE was 10.35% in December 2020, increased slightly to 10.54% by December 2021, then dropped to 6.03% by December 2022. It improved to 10.91% by December 2023, but decreased to 6.11% by December 2024.
In summary, CVS Health Corp's profitability ratios have shown fluctuations over the years, with some improvements followed by declines. It is important for the company to closely monitor and manage these ratios to ensure sustainable profitability and value creation for its stakeholders.