Hexcel Corporation (HXL)

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	215,300	175,200	51,800	14,100	425,200
Total assets	US$ in thousands	2,918,500	2,837,300	2,819,400	2,917,800	3,128,600
Operating ROA		7.38%	6.17%	1.84%	0.48%	13.59%

December 31, 2023 calculation

Operating ROA = Operating income ÷ Total assets
= $215,300K ÷ $2,918,500K
= 7.38%

Operating return on assets (Operating ROA) is a key financial ratio that measures a company's ability to generate profits from its operational assets. It indicates how efficiently the company is utilizing its assets to generate operating income.

Analyzing the trend in Hexcel Corp.'s Operating ROA over the past five years, we observe a fluctuating pattern. In 2019, the company exhibited a relatively high Operating ROA of 13.59%, which may have been attributed to effective asset utilization and strong operational performance. However, in the subsequent years, there was a decline in the ratio. In 2020 and 2021, the Operating ROA remained relatively stable around 2.47% to 2.48%, indicating a decrease in the efficiency of asset utilization.

The improvement in 2022 with an Operating ROA of 5.76% suggests a potential rebound in operational efficiency. This trend continued in 2023, where the Operating ROA further increased to 7.38%, indicating a better utilization of assets to generate operating income compared to the previous year.

Overall, the fluctuating trend in Hexcel Corp.'s Operating ROA implies variations in asset efficiency and operational performance over the years. It is essential for the company to sustain or improve this ratio consistently to enhance profitability and shareholder value in the long term.