Toll Brothers Inc (TOL)

Operating return on assets (Operating ROA)

		Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Operating income	US$ in thousands	1,724,760	1,508,630	1,020,880	550,260	680,800
Total assets	US$ in thousands	12,527,000	12,288,700	11,537,800	11,065,700	10,828,100
Operating ROA		13.77%	12.28%	8.85%	4.97%	6.29%

October 31, 2023 calculation

Operating ROA = Operating income ÷ Total assets
= $1,724,760K ÷ $12,527,000K
= 13.77%

Operating return on assets (Operating ROA) is an essential financial metric that measures a company's efficiency in generating operating profits from its assets. It is calculated by dividing operating income by average total assets. A higher operating ROA indicates that the company is utilizing its assets more efficiently to generate profits.

Looking at the trend of Toll Brothers Inc.'s operating ROA from 2019 to 2023, we observe a consistent improvement in the metric. In 2019, the operating ROA stood at 6.29%, and it has steadily increased each year, reaching 13.77% in 2023. This positive trend indicates that Toll Brothers Inc. has been able to enhance its operational efficiency and profitability in relation to its asset base over the years.

The substantial increase in operating ROA signifies that Toll Brothers Inc. has been successful in efficiently utilizing its assets to generate operating income. This improvement could be attributed to various factors such as effective cost management, increased revenue generation, or better asset utilization.

The consistent upward trend in operating ROA reflects positively on the company's financial health, indicating that it has become more adept at generating profits from its asset base. This trend is favorable for both investors and stakeholders as it showcases the company's ability to generate greater returns from its assets, ultimately leading to improved overall financial performance.

In conclusion, the analysis of Toll Brothers Inc.'s operating ROA demonstrates a noteworthy improvement in the company's operational efficiency and profitability over the years. This positive trajectory suggests that the company has been effectively leveraging its assets to drive profitability, which is a favorable indication for its financial performance.