Timken Company (TKR)

Return on sales

The profitability ratios of Timken Co. indicate its ability to generate profits relative to its revenue and operating expenses over the past five years.

1. Gross Profit Margin: Timken Co.'s gross profit margin has shown a consistent improvement from 2019 to 2023, increasing from 30.13% to 31.64%. This indicates the company's ability to control its production costs and generate a higher percentage of gross profit from its revenue.

2. Operating Profit Margin: The operating profit margin has remained relatively stable over the years, ranging from 12.63% in 2021 to 14.73% in 2023. This reflects the company's efficiency in managing its operating expenses and generating profits from its core business activities.

3. Pretax Margin: The pretax margin shows the company's ability to generate profits before taxes relative to its total revenue. Timken Co.'s pretax margin has fluctuated over the years, ranging from 11.12% in 2023 to 12.46% in 2019. This variability may be influenced by factors such as changes in tax regulations or one-time expenses.

4. Net Profit Margin: The net profit margin reflects the company's ability to generate profits after all expenses have been deducted. Timken Co.'s net profit margin has varied from 8.10% in 2020 to 9.06% in 2022, with a slight decrease to 8.26% in 2023. This indicates the company's ability to effectively manage its overall expenses in relation to its revenue.

Overall, Timken Co. has demonstrated a consistent performance in maintaining profitability levels over the years, with improvements in gross profit margin and relatively stable operating profit margins. The fluctuations in pretax and net profit margins may be reflective of external factors impacting the company's financial performance.

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Return on investment

1. Operating return on assets (Operating ROA):
Timken Co.'s Operating ROA has ranged from 9.44% to 11.28% over the past five years, with a current value of 10.74%. This ratio indicates that the company is generating operating profits of approximately 10.74 cents for every dollar of assets employed in its operations.

2. Return on assets (ROA):
The overall ROA for Timken Co. has fluctuated between 5.64% and 7.45% over the last five years, with the current figure standing at 6.02%. This ratio demonstrates that the company is generating a net income of about 6.02 cents for every dollar of assets it possesses.

3. Return on total capital:
The return on total capital for Timken Co. has varied between 12.81% and 15.38% over the past five years, with the current figure at 14.11%. This ratio suggests that the company is earning a return of approximately 14.11% on all the capital invested in the business, including debt and equity.

4. Return on equity (ROE):
Timken Co.'s ROE has been in the range of 13.21% to 19.38% over the last five years, with the latest figure at 15.26%. This ratio reveals that the company is generating a return of about 15.26% on the shareholders' equity invested in the company.

Overall, Timken Co. has shown relatively stable profitability ratios over the past five years, with some fluctuations in each ratio. The company's management is effectively utilizing its assets and capital to generate profits for its shareholders, as evidenced by these consistent and satisfactory profitability ratios.