Lithia Motors Inc (LAD)

Operating return on assets (Operating ROA)

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Operating income (ttm)	US$ in thousands	1,692,600	1,720,500	1,770,100	1,813,400	1,941,100	2,039,000	2,003,600	1,930,800	1,662,400	1,394,700	1,154,800	838,200	692,800	584,900	492,100	479,300	495,000	479,400	470,200	461,900
Total assets	US$ in thousands	19,632,500	18,269,800	17,682,700	16,421,400	15,006,600	14,074,500	13,007,700	12,080,800	11,146,900	10,204,600	10,092,500	8,251,600	7,902,100	6,395,700	5,539,000	6,014,100	6,083,900	5,737,500	5,774,600	5,692,000
Operating ROA		8.62%	9.42%	10.01%	11.04%	12.93%	14.49%	15.40%	15.98%	14.91%	13.67%	11.44%	10.16%	8.77%	9.15%	8.88%	7.97%	8.14%	8.36%	8.14%	8.11%

December 31, 2023 calculation

Operating ROA = Operating income (ttm) ÷ Total assets
= $1,692,600K ÷ $19,632,500K
= 8.62%

Operating Return on Assets (Operating ROA) is a key financial metric that measures a company's ability to generate profits from its operating activities in relation to its assets. In the case of Lithia Motors, Inc., we observe a consistent decline in the operating ROA over the past eight quarters.

The operating ROA has decreased from 16.09% in Q1 2022 to 8.62% in Q4 2023. This downward trend indicates that the company is becoming less efficient in converting its assets into operating profits. The decreasing trend could be a cause for concern as it may suggest inefficiencies in the company's operations or a decline in profitability relative to its asset base.

Analyzing the data quarterly, we see a gradual decline in the operating ROA, with a sharper decrease in the most recent quarters. This trend indicates a potential erosion of profitability in relation to the company's asset base, which can impact its overall financial performance and competitiveness in the market.

Further investigation into the factors driving this decline in operating ROA, such as changes in operational efficiency, cost structures, revenue generation, or asset utilization, would be crucial for Lithia Motors, Inc. to address any underlying issues and work towards improving its profitability and operational performance.