Simulations Plus Inc (SLP)
Profitability ratios
Return on sales
| Aug 31, 2024 | Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 57.71% | 80.48% | 79.92% | 77.19% | 74.39% |
| Operating profit margin | 8.20% | 14.64% | 27.66% | 24.22% | 27.90% |
| Pretax margin | 16.60% | 19.63% | 28.04% | 23.86% | 27.38% |
| Net profit margin | 13.31% | 16.72% | 23.16% | 21.05% | 22.44% |
The profitability ratios of Simulations Plus Inc have exhibited some fluctuation over the past five years. The gross profit margin, which measures the percentage of revenue retained after accounting for the cost of goods sold, has shown a downward trend, starting at 74.39% in 2020 and decreasing to 57.71% in 2024. This indicates potential challenges in managing production costs or pricing strategies.
The operating profit margin, which reflects the company's ability to generate profits from its core operations, has also decreased over the years, from 27.90% in 2020 to 8.20% in 2024. This suggests a decline in operational efficiency or a rise in operating expenses.
Moreover, the pretax margin, which indicates the proportion of revenue that remains after accounting for all operating expenses but before taxes, has shown some fluctuations, ranging from 23.86% in 2021 to 28.04% in 2022. However, the downward trend observed from 2022 to 2024, dropping to 16.60%, raises concerns about the company's ability to manage its pre-tax earnings effectively.
Lastly, the net profit margin, which represents the percentage of revenue that ultimately translates to net income after all expenses are deducted, has also displayed a decrease from 22.44% in 2020 to 13.31% in 2024. This trend indicates a potential decrease in overall profitability for Simulations Plus Inc, which may require a closer review of cost structures and revenue streams to enhance financial performance in the future.
Return on investment
| Aug 31, 2024 | Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 3.12% | 4.69% | 7.92% | 6.25% | 6.89% |
| Return on assets (ROA) | 5.06% | 5.35% | 6.63% | 5.44% | 5.54% |
| Return on total capital | 3.36% | 5.13% | 8.37% | 6.70% | 7.30% |
| Return on equity (ROE) | 5.46% | 5.86% | 7.00% | 5.90% | 5.98% |
Simulations Plus Inc's profitability ratios have shown some fluctuations over the past five years.
Operating return on assets (Operating ROA) has decreased from 7.92% in 2022 to 3.12% in 2024, indicating a decline in the company's ability to generate operating income from its assets. This may be a concern for investors and stakeholders as it suggests a decrease in operational efficiency.
Return on assets (ROA) has also exhibited variability, with a peak of 6.63% in 2022 and a low of 5.06% in 2024. This metric measures the company's overall profitability in relation to its total assets, reflecting the effectiveness of management in utilizing assets to generate profits.
Return on total capital has followed a similar trend, fluctuating between 3.36% and 8.37% over the five-year period. This ratio assesses the company's profitability in proportion to both equity and debt capital invested in the business.
Return on equity (ROE) has shown a relatively consistent performance compared to the other ratios, ranging from 5.46% to 7.00%. ROE reflects the return generated on shareholders' equity and is an important indicator of a company's financial health and efficiency in generating profits for its investors.
Overall, the trend in the profitability ratios of Simulations Plus Inc suggests some level of inconsistency in the company's ability to generate profits relative to its assets, capital, and equity over the past five years. Investors and analysts may want to delve deeper into the underlying factors driving these fluctuations to assess the company's long-term sustainability and profitability.