International Paper (IP)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 28.16% | 27.95% | 28.44% | 28.56% | 30.16% |
| Operating profit margin | 2.99% | 6.28% | 9.15% | 8.60% | 8.35% |
| Pretax margin | 0.79% | 2.02% | 7.14% | 5.16% | 3.16% |
| Net profit margin | 2.99% | 1.52% | 7.11% | 4.19% | 2.34% |
Based on the provided data, International Paper's profitability ratios have shown some fluctuations over the past five years.
1. Gross Profit Margin: International Paper's gross profit margin has been relatively stable, hovering around 28% to 30%, indicating the company has been able to effectively control its cost of goods sold and generate profits from its core operations.
2. Operating Profit Margin: The operating profit margin has shown some variation, starting at 8.35% in 2020 and peaking at 9.15% in 2022, but then declining to 2.99% in 2024. This suggests that International Paper's operating expenses may have increased relative to its revenue in recent years.
3. Pretax Margin: The pretax margin has also fluctuated, with a significant increase from 3.16% in 2020 to 7.14% in 2022, before dropping to 0.79% in 2024. This indicates that International Paper's pre-tax profitability improved substantially in 2022 but declined sharply in 2024.
4. Net Profit Margin: The net profit margin has shown a similar pattern to the pre-tax margin, with a notable increase from 2.34% in 2020 to 7.11% in 2022, followed by a decrease to 2.99% in 2024. This suggests that International Paper's bottom line profitability improved significantly in 2022 but weakened in the subsequent years.
In conclusion, while International Paper has demonstrated the ability to maintain a stable gross profit margin, its operating, pre-tax, and net profit margins have shown more variability over the past five years, indicating potential challenges in managing operating expenses and achieving consistent bottom-line performance.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 2.44% | 5.11% | 8.09% | 6.60% | 5.42% |
| Return on assets (ROA) | 2.44% | 1.24% | 6.28% | 3.21% | 1.52% |
| Return on total capital | 7.06% | 9.18% | 22.16% | 15.72% | 11.78% |
| Return on equity (ROE) | 6.82% | 3.45% | 17.70% | 8.93% | 6.14% |
Based on the provided data, International Paper's profitability ratios show some fluctuations over the years.
1. Operating Return on Assets (Operating ROA) has shown an increasing trend from 5.42% in 2020 to 8.09% in 2022, before declining to 2.44% in 2024. This ratio indicates the company's ability to generate profit from its operational assets.
2. Return on Assets (ROA) increased significantly from 1.52% in 2020 to 6.28% in 2022, before dropping to 2.44% in 2024. ROA reflects how efficiently the company is utilizing its assets to generate profits.
3. Return on Total Capital followed a similar pattern, increasing from 11.78% in 2020 to 22.16% in 2022, but declining to 7.06% in 2024. This ratio measures the overall profitability of the company relative to its total capital employed.
4. Return on Equity (ROE) also saw fluctuations, with the highest being 17.70% in 2022 and the lowest at 3.45% in 2023. ROE indicates how well the company is generating returns on shareholders' equity.
Overall, International Paper's profitability ratios have shown some variability over the years, indicating changes in the company's profitability and efficiency in utilizing its assets and capital. It is important for the company to analyze these trends and identify potential factors influencing these fluctuations to make informed strategic decisions for future performance.