McKesson Corporation (MCK)
Profitability ratios
Return on sales
| Mar 31, 2025 | Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 3.71% | 4.07% | 4.47% | 4.97% | 5.10% |
| Operating profit margin | 1.23% | 1.27% | 1.58% | 1.08% | 1.48% |
| Pretax margin | 1.21% | 1.23% | 1.67% | 0.73% | -2.11% |
| Net profit margin | 0.92% | 0.97% | 1.29% | 0.42% | -1.82% |
Based on the provided data, we can analyze the profitability ratios of McKesson Corporation over the past five years.
1. Gross Profit Margin:
- The gross profit margin, which indicates the efficiency of the company in generating profits from its revenue after accounting for the cost of goods sold, has decreased steadily from 5.10% in March 31, 2021, to 3.71% in March 31, 2025. This declining trend suggests that McKesson Corporation may be facing challenges in controlling its direct costs or maintaining pricing power.
2. Operating Profit Margin:
- The operating profit margin, which reflects the company's ability to generate profits from its core operations, fluctuated over the five-year period, ranging from 1.08% to 1.58%. Despite some variability, the operating profit margin remained relatively stable overall, indicating a consistent performance in terms of managing operating expenses.
3. Pretax Margin:
- The pretax margin, which shows the percentage of each revenue dollar that translates into pre-tax profits, recovered from a negative position in March 31, 2021, to reach 1.21% in March 31, 2025. This improvement suggests that McKesson Corporation has been more successful in controlling non-operating expenses and generating profits before taxes.
4. Net Profit Margin:
- The net profit margin, representing the portion of revenue that translates into net income after all expenses have been deducted, also saw fluctuations over the five-year period. It improved from a negative -1.82% in March 31, 2021, to 0.92% in March 31, 2025. This indicates that McKesson Corporation has been able to enhance its bottom line profitability, albeit with some variability.
In conclusion, while the company has faced challenges in maintaining its gross profit margin, it has shown relative stability in its operating profit margin. The positive trend in both the pretax and net profit margins over the years suggests improvements in managing costs and enhancing overall profitability.
Return on investment
| Mar 31, 2025 | Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.89% | 5.80% | 7.03% | 4.51% | 5.42% |
| Return on assets (ROA) | 4.39% | 4.45% | 5.71% | 1.76% | -6.67% |
| Return on total capital | — | — | — | — | — |
| Return on equity (ROE) | — | — | — | — | — |
The profitability ratios of McKesson Corporation for the period from March 31, 2021, to March 31, 2025, provide insights into the company's ability to generate profits relative to its assets and equity.
1. Operating Return on Assets (Operating ROA):
- The Operating ROA, which measures operating income generated per dollar of assets, fluctuated over the period, ranging from 4.51% to 7.03%.
- The highest Operating ROA was observed on March 31, 2023, at 7.03%, indicating the company's efficiency in generating operating profits from its assets.
- While the Operating ROA saw fluctuations, it generally remained within a relatively stable range, reflective of McKesson Corporation's operational performance.
2. Return on Assets (ROA):
- The ROA, representing the net income generated relative to total assets, improved from a negative figure of -6.67% on March 31, 2021, to positive values ranging between 4.39% and 5.71% in subsequent years.
- The positive trend in ROA indicates that McKesson Corporation became more efficient in utilizing its assets to generate profits over the period under consideration.
- By consistently improving its ROA, the company demonstrated enhanced profitability and asset management capabilities.
3. Return on Total Capital:
- No data is provided for Return on Total Capital for the period from March 31, 2021, to March 31, 2025, limiting the assessment of the company's overall capital efficiency and profitability.
4. Return on Equity (ROE):
- Similarly, there is a lack of data for Return on Equity (ROE) across the mentioned years, which typically shows the return generated for each dollar of shareholders' equity.
- The absence of ROE data restricts the evaluation of how effectively McKesson Corporation leveraged equity investments to generate profits for its shareholders.
In summary, the analysis of profitability ratios indicates an improvement in McKesson Corporation's efficiency in generating profits from its assets over the period, as evident from the increasing ROA. However, the absence of data for Return on Total Capital and Return on Equity limits a comprehensive assessment of the company's profitability and capital utilization.