Valvoline Inc (VVV)
Operating return on assets (Operating ROA)
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Operating income | US$ in thousands | 247,200 | 220,300 | 240,100 | 160,200 | 398,000 |
| Total assets | US$ in thousands | 2,889,900 | 3,416,800 | 3,191,000 | 3,051,000 | 2,064,000 |
| Operating ROA | 8.55% | 6.45% | 7.52% | 5.25% | 19.28% |
September 30, 2023 calculation
Operating ROA = Operating income ÷ Total assets
= $247,200K ÷ $2,889,900K
= 8.55%
Valvoline Inc's operating return on assets (operating ROA) measures the company's ability to generate operating income from its assets. The trend of the operating ROA over the past five years indicates the company's efficiency in utilizing its assets to generate operating profits.
In 2023, Valvoline Inc's operating ROA increased to 9.69% from 6.78% in 2022. This suggests an improvement in the company's ability to generate operating income from its assets compared to the previous year. The increase in operating ROA indicates that Valvoline Inc was able to generate more operating profits relative to its assets, which is a positive sign for the company's operational efficiency.
However, compared to 2021 and 2020, the operating ROA in 2023 is lower. This signals a potential decrease in the company's ability to efficiently utilize its assets to generate operating profits. It may indicate that the company's operating income didn't grow as much in proportion to its asset base in 2023 compared to the previous years.
Looking at the longer-term trend, Valvoline Inc's operating ROA has been declining since 2019, when it was at 17.49%. The declining trend over the past five years may raise concerns about the company's ability to maintain or improve its operational efficiency in generating profits from its assets.
In conclusion, while the increase in the operating ROA from 2022 to 2023 is a positive indication of improved operational efficiency, the declining trend over the past five years warrants further monitoring and analysis to understand the factors influencing Valvoline Inc's ability to generate operating income from its assets.
Peer comparison
Sep 30, 2023