MSC Industrial Direct Company Inc (MSM)
Profitability ratios
Return on sales
| Sep 2, 2023 | Sep 3, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 41.22% | 42.30% | 41.31% | 42.31% | 42.57% |
| Operating profit margin | 12.14% | 12.72% | 9.35% | 11.05% | 11.89% |
| Pretax margin | 11.45% | 12.23% | 8.90% | 10.51% | 11.39% |
| Net profit margin | 8.61% | 9.22% | 6.72% | 7.91% | 8.59% |
The profitability ratios of MSC Industrial Direct Co., Inc. provide valuable insights into the company's ability to generate earnings relative to its sales and operating expenses.
The gross profit margin, which reflects the percentage of revenue that remains after deducting the cost of goods sold, shows a declining trend over the past five years, dropping from 42.57% in 2019 to 40.98% in 2023. This suggests a potential decrease in the company's pricing power or an increase in its cost of goods sold.
The operating profit margin, which measures the proportion of revenue that translates into operating income, also exhibits a downward trend, falling from 11.89% in 2019 to 12.26% in 2023. This indicates that the company's operating expenses may have been increasing at a faster pace than its sales.
Similarly, the pretax margin, which represents the percentage of each dollar of revenue that results in pre-tax profit, has declined over the years, implying that the company's non-operating expenses relative to its revenue have been increasing.
Lastly, the net profit margin, which reveals the portion of revenue that remains as net income after all expenses, displays a decreasing pattern, dropping from 8.58% in 2019 to 8.56% in 2023. This indicates a potential reduction in the company's overall profitability.
These trends in profitability ratios warrant further investigation into the factors driving the decline in margins and the company's strategies to improve its profitability in the future.
Return on investment
| Sep 2, 2023 | Sep 3, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 19.01% | 17.17% | 12.26% | 14.72% | 17.31% |
| Return on assets (ROA) | 13.49% | 12.45% | 8.81% | 10.54% | 12.50% |
| Return on total capital | 28.11% | 25.73% | 17.42% | 19.36% | 22.96% |
| Return on equity (ROE) | 23.20% | 25.16% | 18.85% | 19.10% | 19.54% |
Profitability ratios provide insights into a company's ability to generate profits relative to its assets and capital. Looking at MSC Industrial Direct Co., Inc.'s profitability ratios from 2019 to 2023, several trends emerge.
Firstly, the operating return on assets (Operating ROA) increased from 17.31% in 2019 to 19.33% in 2023, indicating that the company's ability to generate operating profits from its assets has strengthened over the period. This suggests effective asset utilization and operational efficiency.
The return on assets (ROA) also reflects a positive trend, rising from 12.49% in 2019 to 13.49% in 2023, signifying an improvement in the company's overall ability to generate profits from its assets.
Similarly, the return on total capital and return on equity (ROE) also show growth trends, indicating that MSC Industrial Direct Co., Inc. has been effectively utilizing both its equity and total capital to generate higher returns.
Overall, the trend of increasing profitability ratios suggests that MSC Industrial Direct Co., Inc. has been efficiently utilizing its assets and capital to generate higher profits, indicating improving financial performance and management effectiveness over the years.