Humana Inc (HUM)

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	4,013,000	3,800,000	3,148,000	4,986,000	3,192,000
Total assets	US$ in thousands	47,065,000	43,055,000	44,358,000	34,969,000	29,074,000
Operating ROA		8.53%	8.83%	7.10%	14.26%	10.98%

December 31, 2023 calculation

Operating ROA = Operating income ÷ Total assets
= $4,013,000K ÷ $47,065,000K
= 8.53%

Operating return on assets (operating ROA) is a key financial ratio that measures a company's ability to generate profit from its operational assets. The trend analysis of Humana Inc.'s operating ROA from 2019 to 2023 reveals fluctuations in the company's efficiency in utilizing its assets to generate operating income.

In 2019, Humana Inc. had an operating ROA of 10.98%, indicating that the company was able to generate $0.1098 in operating income for every dollar of assets employed in its operations. Subsequently, in 2020, the company witnessed a significant increase in its operating ROA to 14.26%, reflecting improved asset utilization efficiency and profitability.

However, the trend reversed in 2021 when Humana Inc.'s operating ROA declined to 7.10%, signaling a decrease in the company's ability to generate operating income relative to its asset base. Despite this decrease, the company managed to improve its operating ROA in 2022 to 8.83%, indicating a moderate recovery in asset efficiency.

In the most recent period, as of December 31, 2023, Humana Inc.'s operating ROA stood at 8.53%, showing a slight decline compared to the previous year. While the company's operating ROA fluctuated over the years, it remained above the industry average, suggesting that Humana Inc. has been relatively efficient in generating operating income from its assets compared to its peers.

Overall, the trend analysis of Humana Inc.'s operating ROA highlights the company's varying performance in asset utilization and profitability over the five-year period, with fluctuations reflecting changes in operational efficiency and income generation from its asset base. The company's ability to consistently monitor and improve its operating ROA can help drive sustainable profitability and shareholder value.