McCormick & Company Incorporated (MKC)
Return on equity (ROE)
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | ||
|---|---|---|---|---|---|---|
| Net income | US$ in thousands | 680,600 | 682,000 | 755,300 | 747,400 | 702,700 |
| Total stockholders’ equity | US$ in thousands | 5,060,700 | 4,680,500 | 4,411,000 | 3,926,100 | 3,444,200 |
| ROE | 13.45% | 14.57% | 17.12% | 19.04% | 20.40% |
November 30, 2023 calculation
ROE = Net income ÷ Total stockholders’ equity
= $680,600K ÷ $5,060,700K
= 13.45%
Based on the provided data, McCormick & Co., Inc.'s return on equity (ROE) has exhibited a declining trend over the past five years. The ROE decreased from 20.40% in November 2019 to 13.45% in November 2023. This downward trajectory suggests that the company's ability to generate profits from its shareholders' equity has diminished over the period.
The decreasing trend in ROE may indicate challenges in efficiently utilizing the shareholders' investment to generate earnings. It is imperative for the company to assess and address the factors contributing to the decline in ROE, such as increases in costs, reductions in net income, or changes in the capital structure.
While a declining ROE may raise concerns about the company's profitability and operational efficiency, it is important to conduct a comprehensive analysis of other financial ratios and factors affecting the company's performance to gain a holistic understanding of its financial health.