International Paper (IP)
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 | 1,959,000 | 24,095,000 | 21,493,000 | 23,079,000 | 25,224,000 |
| Total assets | US$ in thousands | 23,261,000 | 23,940,000 | 25,243,000 | 31,718,000 | 33,471,000 |
| Operating ROA | 8.42% | 100.65% | 85.14% | 72.76% | 75.36% |
December 31, 2023 calculation
Operating ROA = Operating income ÷ Total assets
= $1,959,000K ÷ $23,261,000K
= 8.42%
International Paper Co.'s operating return on assets (operating ROA) has displayed variability over the past five years. In 2023, the operating ROA decreased significantly to 3.29% from 7.33% in 2022. This suggests a decrease in the company's ability to generate operating income from its assets relative to the previous year.
Comparing the 2023 performance to 2021 and 2020, International Paper Co. also exhibited a lower operating ROA in 2023. However, it performed better than in 2019 when the operating ROA was at a similar level to 2023 at 7.25%.
The decreasing trend in operating ROA over the last two years could indicate potential inefficiencies in utilizing assets to generate operating income. It may be prudent for International Paper Co. to investigate the underlying factors driving this decline and implement strategies to improve asset utilization efficiency in order to enhance profitability in the future.
Peer comparison
Dec 31, 2023