Solventum Corp. (SOLV)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Gross profit margin | 55.33% | 57.75% | 60.25% | 59.26% |
| Operating profit margin | 17.96% | 20.82% | 23.00% | 19.64% |
| Pretax margin | 11.04% | 20.81% | 23.03% | 19.78% |
| Net profit margin | 8.40% | 16.52% | 17.87% | 15.63% |
Solventum Corp.'s profitability ratios have shown a declining trend over the past four years, as evidenced by the decreasing gross profit margin, operating profit margin, pretax margin, and net profit margin.
The gross profit margin decreased from 60.25% in 2021 to 55.33% in 2023, indicating a decrease in the company's profitability after accounting for the cost of goods sold. This may be due to factors such as increased production costs or pricing pressures.
Similarly, the operating profit margin declined from 23.00% in 2021 to 17.96% in 2023, suggesting that the company's operating expenses have increased relative to its revenues. This could indicate inefficiencies in cost management or a decrease in sales volume.
The pretax margin also decreased from 23.03% in 2021 to 11.04% in 2023, reflecting a decline in the company's profitability before accounting for taxes. This may be due to lower operating income or increased non-operating expenses.
Lastly, the net profit margin fell from 17.87% in 2021 to 8.40% in 2023, indicating a decrease in the company's overall profitability after all expenses, including taxes, have been accounted for. This decline may be attributed to a combination of factors affecting the company's revenue and cost structure.
Overall, the downward trend in Solventum Corp.'s profitability ratios suggests potential challenges the company may be facing in maintaining or improving its profitability levels over the analyzed period.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 10.29% | 12.45% | 13.35% | — |
| Return on assets (ROA) | 4.81% | 9.88% | 10.37% | — |
| Return on total capital | 43.41% | 14.42% | 15.58% | — |
| Return on equity (ROE) | 20.30% | 11.44% | 12.11% | — |
Solventum Corp.'s profitability ratios show varying trends over the past four years. In terms of Operating Return on Assets (Operating ROA), the company's performance has declined from 13.35% in 2021 to 10.29% in 2023. This indicates that the company's operating income generated from its assets has decreased over the period.
Return on Assets (ROA) also follows a downward trend, dropping from 10.37% in 2021 to 4.81% in 2023. The decreasing ROA suggests that the company's ability to generate profit from its total assets has weakened over time.
On the other hand, Return on Total Capital has shown fluctuations, with a significant increase in 2023 to 43.41% from 15.58% in 2021. This ratio measures how effectively the company is utilizing its total capital to generate profits.
Return on Equity (ROE) has fluctuated over the years, showing an increase in 2023 at 20.30% compared to 12.11% in 2021. This indicates that the company's profitability relative to shareholder equity has improved.
Overall, Solventum Corp.'s profitability ratios demonstrate mixed performance, with some ratios showing improvement while others exhibit a decline or fluctuation. Further analysis of the company's financial statements and business operations would be necessary to understand the underlying factors driving these trends.