Walgreens Boots Alliance Inc (WBA)
Operating profit margin
| Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Operating income | US$ in thousands | -6,882,000 | 1,387,000 | 2,342,000 | 982,000 | 4,766,000 |
| Revenue | US$ in thousands | 140,471,000 | 132,961,000 | 131,917,000 | 138,974,000 | 136,162,000 |
| Operating profit margin | -4.90% | 1.04% | 1.78% | 0.71% | 3.50% |
August 31, 2023 calculation
Operating profit margin = Operating income ÷ Revenue
= $-6,882,000K ÷ $140,471,000K
= -4.90%
The operating profit margin is a key financial ratio that indicates the percentage of revenue that translates into operating profit. It is calculated by dividing operating profit by revenue. A higher operating profit margin implies that the company is able to control its production costs, while a lower margin may indicate inefficiency or higher operating expenses.
Analyzing the operating profit margin of Walgreens Boots Alliance Inc from 2019 to 2023, we can observe a decreasing trend. In 2019, the operating profit margin was 3.53%, indicating that for every dollar of sales, the company generated 3.53 cents in operating profit. However, this margin began to decline in the subsequent years.
By 2023, the operating profit margin had turned negative, reaching -5.13%. This negative margin suggests that the company's operating expenses and/or cost of goods sold exceeded its operating profit, leading to a net operating loss.
The declining trend in the operating profit margin could be a cause for concern, as it indicates diminishing profitability and efficiency in managing operating costs. It is essential for the company to closely examine its cost structure and operational efficiency to reverse this trend.
Furthermore, a negative operating profit margin can impact the company's overall profitability and financial health. The company may need to undertake cost-cutting measures, improve operational efficiency, or re-evaluate its pricing strategy to enhance the operating profit margin and return to profitability.
In conclusion, the declining trend in Walgreens Boots Alliance Inc's operating profit margin, culminating in a negative margin in 2023, highlights the company's potential operational and financial challenges. Addressing these challenges will be crucial for the company to regain profitability and sustain long-term success.
Peer comparison
Aug 31, 2023