Watsco Inc (WSO)
Operating return on assets (Operating ROA)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Operating income | US$ in thousands | 794,810 | 831,578 | 628,528 | 401,034 | 366,884 |
| Total assets | US$ in thousands | 3,729,180 | 3,488,210 | 3,085,860 | 2,484,350 | 2,556,160 |
| Operating ROA | 21.31% | 23.84% | 20.37% | 16.14% | 14.35% |
December 31, 2023 calculation
Operating ROA = Operating income ÷ Total assets
= $794,810K ÷ $3,729,180K
= 21.31%
The operating return on assets (operating ROA) of Watsco Inc. has shown a positive trend over the past five years, increasing from 13.95% in 2019 to 20.61% in 2023. This indicates that the company has been able to generate a higher operating profit relative to its total assets over the years, reflecting an improvement in operational efficiency and asset utilization.
The significant rise in operating ROA from 2019 to 2023 suggests that Watsco Inc. has been successful in increasing its operating income in relation to its total assets employed. This could be attributed to various factors such as effective cost management, higher sales volume, improved pricing strategies, or operational productivity enhancements.
Overall, the rising trend in operating ROA demonstrates Watsco Inc.'s ability to effectively utilize its assets to generate operating profits, which is a positive sign for stakeholders as it indicates the company's operational health and efficiency.