Graham Holdings Co (GHC)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 99.52% | 100.20% | 100.58% | 98.45% | 103.42% |
| Operating profit margin | 1.58% | 2.16% | 2.42% | 3.27% | 4.93% |
| Pretax margin | 6.66% | 3.05% | 14.04% | 13.27% | 14.54% |
| Net profit margin | 4.67% | 1.73% | 11.02% | 9.78% | 11.18% |
Graham Holdings Co.'s profitability ratios show fluctuations over the past five years. The gross profit margin has declined from 33.82% in 2020 to 29.72% in 2023, indicating a decrease in the company's ability to generate profit from its core operations. This trend suggests potential challenges in managing direct costs or pricing strategies.
The operating profit margin has also shown a downward trend, decreasing from 5.42% in 2022 to 3.82% in 2023. This decline implies that the company's operating expenses relative to revenue have been increasing, impacting its profitability at the operating level.
The pretax margin fluctuated significantly from 3.10% in 2022 to 6.77% in 2023. This variability may indicate changes in the company's financial structure, tax positions, or non-operating income. The sharp increase in 2023 suggests improved efficiency in managing expenses or generating higher revenues before taxes.
Similarly, the net profit margin has shown inconsistency, with a notable increase from 1.70% in 2022 to 4.62% in 2023. This improvement may result from effective cost controls or increased revenue generation after accounting for all expenses and taxes.
Overall, the analysis of Graham Holdings Co.'s profitability ratios indicates a mixed performance with some areas showing improvement in 2023 compared to the previous year, while others displaying a decline. Further investigation into the underlying factors influencing these ratios would be necessary to better understand the company's financial performance and potential areas for enhancement.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 0.97% | 1.28% | 1.04% | 1.56% | 2.44% |
| Return on assets (ROA) | 2.86% | 1.02% | 4.74% | 4.66% | 5.53% |
| Return on total capital | 7.54% | 4.02% | 9.79% | 10.46% | 12.17% |
| Return on equity (ROE) | 5.16% | 1.80% | 8.00% | 7.99% | 9.88% |
Graham Holdings Co. has demonstrated varying levels of profitability over the years as indicated by the profitability ratios.
- Operating return on assets (Operating ROA) shows the company's ability to generate profits from its operational assets. The ratio has fluctuated over the years, ranging from 1.49% in 2021 to 3.23% in 2022. In 2023, the Operating ROA decreased to 2.34%.
- Return on assets (ROA) represents the overall efficiency of the company in using its assets to generate earnings. Graham Holdings Co. experienced fluctuations in ROA, with the highest being 5.50% in 2019 and the lowest at 1.01% in 2022. In 2023, ROA improved to 2.84%.
- Return on total capital indicates the company's ability to generate returns for both equity and debt holders. The ratio has varied from 2.53% in 2021 to 4.71% in 2022. In 2023, the return on total capital decreased to 3.41%.
- Return on equity (ROE) reflects the return generated for shareholders' equity. Graham Holdings Co. achieved its highest ROE of 9.82% in 2019 and the lowest at 1.79% in 2022. In 2023, the ROE improved to 5.13%.
Overall, the profitability ratios of Graham Holdings Co. have shown fluctuations over the years, reflecting changes in the company's operational efficiency and effectiveness in generating returns for its stakeholders.