Phillips 66 (PSX)

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	1,746,000	8,020,000	12,745,000	3,826,000	-287,000
Total assets	US$ in thousands	72,582,000	75,501,000	76,442,000	55,594,000	54,721,000
Operating ROA		2.41%	10.62%	16.67%	6.88%	-0.52%

December 31, 2024 calculation

Operating ROA = Operating income ÷ Total assets
= $1,746,000K ÷ $72,582,000K
= 2.41%

Operating ROA measures how efficiently a company generates profits from its assets by calculating the return on assets used in its core operations. Analyzing the data provided for Phillips 66, we observe fluctuations in the operating ROA over the years:

1. December 31, 2020: -0.52%
- The negative value indicates that the company's core operations yielded a loss relative to its assets. This could be a result of challenges faced during that period.

2. December 31, 2021: 6.88%
- There is a notable improvement in the operating ROA, reflecting that the company generated a modest return on its assets compared to the previous year.

3. December 31, 2022: 16.67%
- The operating ROA experienced a significant surge, indicating a substantial increase in the efficiency of utilizing assets to generate earnings. This may be due to enhanced operational performance or strategic initiatives.

4. December 31, 2023: 10.62%
- While there was a slight decrease from the previous year, the operating ROA remained at a relatively healthy level, demonstrating continued effectiveness in generating returns from assets.

5. December 31, 2024: 2.41%
- The operating ROA dropped significantly compared to the prior year, suggesting a decline in the efficiency of asset utilization for generating profits. This could be a result of various factors impacting operational performance.

Overall, the trend in Phillips 66's operating ROA reveals fluctuations in the efficiency of its core operations in generating returns from assets over the years. It is essential for the company to assess the underlying reasons for these fluctuations and implement strategies to maintain or improve its operating ROA for sustainable financial performance.