Walgreens Boots Alliance Inc (WBA)
Operating return on assets (Operating ROA)
| 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 |
| Total assets | US$ in thousands | 96,628,000 | 90,124,000 | 81,285,000 | 87,174,000 | 67,598,000 |
| Operating ROA | -7.12% | 1.54% | 2.88% | 1.13% | 7.05% |
August 31, 2023 calculation
Operating ROA = Operating income ÷ Total assets
= $-6,882,000K ÷ $96,628,000K
= -7.12%
Operating return on assets (operating ROA) is a key financial ratio that measures a company's ability to generate operating profits from its assets. Let's analyze the trend in Walgreens Boots Alliance Inc's operating ROA over the past five years.
In 2019, the operating ROA was at its peak at 7.15%, indicating that the company generated $7.15 in operating income for every $100 of assets. However, the operating ROA witnessed a steady decline over the next four years. By 2023, the operating ROA had turned negative at -7.38%, indicating that the company's operating earnings were insufficient to cover the assets employed in its operations.
This decline in operating ROA suggests that Walgreens Boots Alliance Inc's ability to generate operating profits from its assets weakened over the period. This trend signals potential concerns regarding the company's operational efficiency and asset utilization.
It is crucial for the company to analyze the factors contributing to the decline in operating ROA, such as operational inefficiencies, declining profit margins, or suboptimal asset utilization. Identifying and addressing these issues is essential for improving the operating ROA and ensuring the efficient use of the company's assets to generate profits.
In conclusion, the declining trend in Walgreens Boots Alliance Inc's operating ROA over the past five years signifies a potential deterioration in the company's operational efficiency and asset profitability. Addressing the underlying issues driving this trend will be imperative for the company's long-term financial performance.
Peer comparison
Aug 31, 2023