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Hewlett-Packard Co. (HPQ) | Profitability Analysis

Profitability ratios measure the company's ability to generate profitable sales from its resources (assets).


Ratios (Summary)

Hewlett-Packard Co., profitability ratios

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    Oct 31, 2012 Oct 31, 2011 Oct 31, 2010 Oct 31, 2009 Oct 31, 2008 Oct 31, 2007
  Return on Sales
Gross profit margin 23.24% 23.35% 23.76% 23.59% 24.03% 24.36%
Operating profit margin -9.19% 7.61% 9.11% 8.85% 8.85% 8.36%
Net profit margin -10.51% 5.56% 6.95% 6.69% 7.04% 6.97%
  Return on Investment
Return on equity (ROE) -56.38% 18.31% 21.66% 18.91% 21.39% 18.85%
Return on assets (ROA) -11.63% 5.46% 7.04% 6.67% 7.35% 8.19%

Source: Based on data from Hewlett-Packard Co. Annual Reports

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. Hewlett-Packard Co.'s gross profit margin deteriorated from 2010 to 2011 and from 2011 to 2012.
Operating profit margin A profitability ratio calculated as operating income divided by revenue. Hewlett-Packard Co.'s operating profit margin deteriorated from 2010 to 2011 and from 2011 to 2012.
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Hewlett-Packard Co.'s net profit margin deteriorated from 2010 to 2011 and from 2011 to 2012.
ROE A profitability ratio calculated as net income divided by shareholders' equity. Hewlett-Packard Co.'s ROE deteriorated from 2010 to 2011 and from 2011 to 2012.
ROA A profitability ratio calculated as net income divided by total assets. Hewlett-Packard Co.'s ROA deteriorated from 2010 to 2011 and from 2011 to 2012.

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Gross Profit Margin

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    Oct 31, 2012 Oct 31, 2011 Oct 31, 2010 Oct 31, 2009 Oct 31, 2008 Oct 31, 2007
  Selected Financial Data (USD $ in millions)
Gross profit 27,972  29,716  29,944  27,028  28,443  25,399 
Net revenue 120,357  127,245  126,033  114,552  118,364  104,286 
   
Gross profit margin1 23.24% 23.35% 23.76% 23.59% 24.03% 24.36%

Source: Based on data from Hewlett-Packard Co. Annual Reports

2012 Calculations

1 Gross profit margin = 100 × Gross profit ÷ Net revenue
= 100 × 27,972 ÷ 120,357 = 23.24%

Ratio Description The company
Gross profit margin Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. Hewlett-Packard Co.'s gross profit margin deteriorated from 2010 to 2011 and from 2011 to 2012.

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Operating Profit Margin

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    Oct 31, 2012 Oct 31, 2011 Oct 31, 2010 Oct 31, 2009 Oct 31, 2008 Oct 31, 2007
  Selected Financial Data (USD $ in millions)
Earnings (loss) from operations (11,057) 9,677  11,479  10,136  10,473  8,719 
Net revenue 120,357  127,245  126,033  114,552  118,364  104,286 
  Operating Profit Margin, Comparison to Industry
Hewlett-Packard Co.1 -9.19% 7.61% 9.11% 8.85% 8.85% 8.36%
  Industry, Technology 15.26% 20.61% 20.74% 17.49% 18.55% –%

Source: Based on data from Hewlett-Packard Co. Annual Reports

2012 Calculations

1 Operating profit margin = 100 × Earnings (loss) from operations ÷ Net revenue
= 100 × -11,057 ÷ 120,357 = -9.19%

Ratio Description The company
Operating profit margin A profitability ratio calculated as operating income divided by revenue. Hewlett-Packard Co.'s operating profit margin deteriorated from 2010 to 2011 and from 2011 to 2012.

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Net Profit Margin

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    Oct 31, 2012 Oct 31, 2011 Oct 31, 2010 Oct 31, 2009 Oct 31, 2008 Oct 31, 2007
  Selected Financial Data (USD $ in millions)
Net earnings (loss) (12,650) 7,074  8,761  7,660  8,329  7,264 
Net revenue 120,357  127,245  126,033  114,552  118,364  104,286 
  Net Profit Margin, Comparison to Industry
Hewlett-Packard Co.1 -10.51% 5.56% 6.95% 6.69% 7.04% 6.97%
  Industry, Technology 10.96% 16.08% 16.11% 13.10% 13.99% –%

Source: Based on data from Hewlett-Packard Co. Annual Reports

2012 Calculations

1 Net profit margin = 100 × Net earnings (loss) ÷ Net revenue
= 100 × -12,650 ÷ 120,357 = -10.51%

Ratio Description The company
Net profit margin An indicator of profitability, calculated as net income divided by revenue. Hewlett-Packard Co.'s net profit margin deteriorated from 2010 to 2011 and from 2011 to 2012.

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Return on Equity (ROE)

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    Oct 31, 2012 Oct 31, 2011 Oct 31, 2010 Oct 31, 2009 Oct 31, 2008 Oct 31, 2007
  Selected Financial Data (USD $ in millions)
Net earnings (loss) (12,650) 7,074  8,761  7,660  8,329  7,264 
Total HP stockholders' equity 22,436  38,625  40,449  40,517  38,942  38,526 
  ROE, Comparison to Industry
Hewlett-Packard Co.1 -56.38% 18.31% 21.66% 18.91% 21.39% 18.85%
  Industry, Technology 17.84% 26.99% 26.28% 21.25% 27.29% –%

Source: Based on data from Hewlett-Packard Co. Annual Reports

2012 Calculations

1 ROE = 100 × Net earnings (loss) ÷ Total HP stockholders' equity
= 100 × -12,650 ÷ 22,436 = -56.38%

Ratio Description The company
ROE A profitability ratio calculated as net income divided by shareholders' equity. Hewlett-Packard Co.'s ROE deteriorated from 2010 to 2011 and from 2011 to 2012.

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Return on Assets (ROA)

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    Oct 31, 2012 Oct 31, 2011 Oct 31, 2010 Oct 31, 2009 Oct 31, 2008 Oct 31, 2007
  Selected Financial Data (USD $ in millions)
Net earnings (loss) (12,650) 7,074  8,761  7,660  8,329  7,264 
Total assets 108,768  129,517  124,503  114,799  113,331  88,699 
  ROA, Comparison to Industry
Hewlett-Packard Co.1 -11.63% 5.46% 7.04% 6.67% 7.35% 8.19%
  Industry, Technology 8.07% 12.28% 12.46% 10.23% 12.22% –%

Source: Based on data from Hewlett-Packard Co. Annual Reports

2012 Calculations

1 ROA = 100 × Net earnings (loss) ÷ Total assets
= 100 × -12,650 ÷ 108,768 = -11.63%

Ratio Description The company
ROA A profitability ratio calculated as net income divided by total assets. Hewlett-Packard Co.'s ROA deteriorated from 2010 to 2011 and from 2011 to 2012.

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