LKQ Corporation (LKQ)
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 | 1,199,000 | 1,357,000 | 1,581,000 | 1,474,370 | 985,577 |
| Total assets | US$ in thousands | 14,955,000 | 15,079,000 | 12,038,000 | 12,606,200 | 12,360,500 |
| Operating ROA | 8.02% | 9.00% | 13.13% | 11.70% | 7.97% |
December 31, 2024 calculation
Operating ROA = Operating income ÷ Total assets
= $1,199,000K ÷ $14,955,000K
= 8.02%
Operating ROA, a key financial ratio, measures a company's ability to generate operating profit from its assets. Looking at LKQ Corporation's trend in Operating ROA over the years, we can observe growth in performance. In December 2020, the Operating ROA stood at 7.97%, indicating that the company generated around 7.97 cents of operating profit for every dollar of assets.
Moving to December 2021, LKQ Corporation improved its performance significantly with an Operating ROA of 11.70%, showcasing enhanced efficiency in asset utilization to generate higher operating profits. The positive trend continued into 2022, where the Operating ROA further increased to 13.13%, reflecting strong operational performance during that period.
However, in December 2023, there was a slight decline in the Operating ROA to 9.00%. This decrease could be indicative of various factors such as changes in operating expenses, fluctuations in revenue, or shifts in asset base composition.
In the most recent data available, December 2024, the Operating ROA was recorded at 8.02%. While this shows a decrease from the previous year, it still demonstrates a respectable level of efficiency in generating operating income relative to the company's asset base.
In conclusion, the progressive improvement in LKQ Corporation's Operating ROA up to 2022 reflects the company's ability to efficiently utilize its assets to drive operating profitability. The slight decline in subsequent years warrants further analysis to understand the underlying factors influencing the ratio's movement and to identify areas for potential operational enhancement.