Dow Inc (DOW)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 5.14% | 9.86% | 15.76% | 13.48% | 14.65% |
| Operating profit margin | 1.07% | 5.16% | 11.93% | 7.13% | 9.81% |
| Pretax margin | 1.31% | 10.60% | 14.65% | 5.19% | -2.07% |
| Net profit margin | 1.32% | 8.05% | 11.48% | 3.18% | -3.16% |
The profitability ratios of Dow Inc demonstrate a declining trend over the past five years. The gross profit margin, a measure of a company's ability to generate revenue after accounting for the cost of goods sold, has seen a consistent decrease from 19.61% in 2021 to 10.94% in 2023. This could indicate challenges in managing production and overhead costs.
Similarly, the operating profit margin, which reflects how efficiently the company generates profit from its core operations, has also experienced a significant drop, declining from 14.35% in 2021 to 4.71% in 2023. This suggests a deterioration in the company's ability to control its operating expenses and maintain profitability.
The pretax margin, representing the company's earnings before taxes relative to its total revenue, has shown a declining trend as well, falling from 14.82% in 2021 to 1.47% in 2023. This downward trajectory may signal challenges faced by Dow Inc in managing its tax liabilities and sustaining its profitability.
Moreover, the net profit margin, indicating the company's net income as a percentage of its total revenue, has also experienced a consistent decline, dropping from 11.48% in 2021 to 1.32% in 2023. This decrease suggests that Dow Inc has been facing challenges in controlling its operating costs, interest expenses, and taxes, which have impacted its bottom-line profitability.
Overall, based on the declining trend in these profitability ratios, it appears that Dow Inc has been facing challenges in managing its costs and maintaining its profitability over the past five years. Analysis of the underlying factors contributing to this trend would be important for understanding the company's overall financial performance.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 0.83% | 4.84% | 10.41% | 4.47% | 6.96% |
| Return on assets (ROA) | 1.02% | 7.56% | 10.02% | 1.99% | -2.25% |
| Return on total capital | 7.81% | 19.63% | 25.13% | 8.83% | 0.46% |
| Return on equity (ROE) | 3.17% | 22.12% | 34.74% | 9.85% | -10.04% |
Based on the profitability ratios of Dow Inc over the past five years, several key insights can be gleaned. The operating return on assets (Operating ROA) has shown a declining trend from 12.52% in 2021 to 3.62% in 2023, indicating a decrease in the company's ability to generate operating income from its assets. Similarly, the return on assets (ROA) has also exhibited a declining trend, dropping from 10.02% in 2021 to 1.02% in 2023, suggesting a reduced profitability relative to the total assets employed.
On the other hand, the return on total capital has also shown a decreasing trend from 26.99% in 2021 to 5.88% in 2023, indicating a declining ability to generate returns from the total capital invested in the company. In addition, the return on equity (ROE) has fluctuated over the period, with significant declines in 2019 and 2023, reaching -10.04% and 3.17% respectively.
Overall, the declining trends in the profitability ratios, specifically the ROA and ROE, may signal challenges in generating returns and efficiency in utilizing assets and equity. It would be important for Dow Inc to address these trends and implement strategies to improve profitability and optimize the utilization of its assets and capital.