Illinois Tool Works Inc (ITW)

Operating return on assets (Operating ROA)

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Operating income US$ in thousands 4,264,000 4,040,000 3,790,000 3,477,000 2,882,000
Total assets US$ in thousands 13,692,000 15,518,000 15,422,000 16,077,000 15,612,000
Operating ROA 31.14% 26.03% 24.58% 21.63% 18.46%

December 31, 2024 calculation

Operating ROA = Operating income ÷ Total assets
= $4,264,000K ÷ $13,692,000K
= 31.14%

The operating return on assets (ROA) for Illinois Tool Works Inc has shown a positive trend over the five-year period. The company's operating ROA has improved consistently from 18.46% as of December 31, 2020, to 31.14% as of December 31, 2024. This indicates that the company has been generating more operating income relative to its total assets over time.

The increasing trend in operating ROA signifies that Illinois Tool Works Inc is utilizing its assets efficiently to generate operating profits. A rising operating ROA is typically viewed as a positive indicator of operational efficiency and profitability. It shows that the company is effectively managing its assets to drive higher operating earnings, which is essential for sustainable growth and shareholder value creation.

The significant improvement in operating ROA from 2020 to 2024 suggests that Illinois Tool Works Inc has been successful in optimizing its operational performance and enhancing asset utilization. This positive trend may also reflect the company's effective cost management, operational enhancements, strategic investments, or other factors contributing to improved profitability.

Overall, the increasing operating ROA for Illinois Tool Works Inc indicates a favorable performance in terms of generating operating income relative to its asset base, portraying efficiency and profitability in the company's operations.