Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Paramount Global, profitability ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The profitability profile of the entity between 2018 and 2022 is characterized by a general downward trajectory, interrupted by a brief recovery in 2021, followed by a significant contraction across all key metrics in 2022.
- Margin Analysis
- Gross profit margin exhibited a peak of 40.71% in 2020 before declining to its lowest point of 34.19% by 2022, indicating a gradual increase in the cost of goods sold relative to revenue. Operating profit margin remained volatile, reaching a high of 22.03% in 2021 before experiencing a sharp collapse to 7.77% in 2022. This volatility is mirrored in the net profit margin, which peaked at 15.89% in 2021 and plummeted to 3.66% in 2022, suggesting that the deterioration in the final year was driven by both operating expenses and non-operating pressures.
- Efficiency and Return Metrics
- Return on equity (ROE) showed a precipitous decline from a high of 69.90% in 2018 to 4.79% in 2022. While there was a moderate recovery to 20.28% in 2021, the overall trend indicates a substantial reduction in the entity's ability to generate profits from shareholder investments. Similarly, return on assets (ROA) followed a downward trend, falling from 8.97% in 2018 to 1.89% in 2022, reflecting a diminished efficiency in utilizing the total asset base to drive bottom-line growth.
The convergence of declining margins and returns in 2022 suggests a period of severe financial stress or a significant transition in the cost structure. The sharp drop in both operating and net margins in the final year of the period indicates that the entity faced substantial headwinds that heavily eroded its profitability.
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Gross Profit Margin
Paramount Global, gross profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | 10,309) | 10,842) | 10,293) | 10,589) | 5,403) | |
| Revenues | 30,154) | 28,586) | 25,285) | 27,812) | 14,514) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 34.19% | 37.93% | 40.71% | 38.07% | 37.23% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 55.38% | 56.94% | — | — | — | |
| Comcast Corp. | 68.53% | 66.96% | — | — | — | |
| Meta Platforms Inc. | 78.35% | 80.79% | — | — | — | |
| Netflix Inc. | 39.37% | 41.64% | — | — | — | |
| Walt Disney Co. | 34.24% | 33.06% | 32.89% | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × 10,309 ÷ 30,154 = 34.19%
2 Click competitor name to see calculations.
Between 2018 and 2022, total revenues experienced significant growth, increasing from 14,514 million US dollars to 30,154 million US dollars. While there was a sharp increase in revenue between 2018 and 2019, gross profit followed a different trajectory; after an initial surge in 2019, gross profit remained relatively stagnant, fluctuating between 10,293 million and 10,842 million US dollars from 2019 through 2022.
- Gross Profit Margin Trend
- The gross profit margin exhibited an upward trend during the first three years of the period, rising from 37.23% in 2018 to a peak of 40.71% in 2020. This indicates an initial period of improved operational efficiency or favorable pricing relative to the cost of sales.
- Margin Compression
- A reversal in the profitability trend is observed after 2020. The gross profit margin declined to 37.93% in 2021 and further contracted to 34.19% in 2022. This represents the lowest margin in the five-year sequence, signaling that costs grew at a faster rate than revenues during the latter stage of the period.
- Revenue and Profitability Divergence
- A notable divergence occurred between 2021 and 2022, where revenues reached their highest point of 30,154 million US dollars, yet gross profit decreased from 10,842 million to 10,309 million US dollars. This inverse relationship highlights a significant reduction in the company's ability to convert sales into gross profit, leading to the aforementioned margin compression.
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Operating Profit Margin
Paramount Global, operating profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 2,342) | 6,297) | 4,139) | 4,273) | 2,768) | |
| Revenues | 30,154) | 28,586) | 25,285) | 27,812) | 14,514) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 7.77% | 22.03% | 16.37% | 15.36% | 19.07% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 26.46% | 30.55% | — | — | — | |
| Comcast Corp. | 11.56% | 17.89% | — | — | — | |
| Meta Platforms Inc. | 24.82% | 39.65% | — | — | — | |
| Netflix Inc. | 17.82% | 20.86% | — | — | — | |
| Walt Disney Co. | 7.90% | 4.46% | -2.97% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Media & Entertainment | 20.46% | 26.39% | — | — | — | |
| Operating Profit Margin, Industry | ||||||
| Communication Services | 16.70% | 22.45% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Operating profit margin = 100 × Operating income ÷ Revenues
= 100 × 2,342 ÷ 30,154 = 7.77%
2 Click competitor name to see calculations.
The operating profitability of the organization exhibited significant volatility between 2018 and 2022, characterized by a period of expansion followed by a sharp contraction in the final year of the sequence. While revenues generally trended upward, the operating profit margin did not maintain a linear correlation with top-line growth.
- Revenue Growth Patterns
- A substantial increase in total revenues was observed, rising from US$ 14,514 million in 2018 to US$ 30,154 million in 2022. Despite a marginal decline in 2020, the overall trajectory indicates a consistent expansion of the revenue base over the five-year period.
- Operating Income Volatility
- Operating income demonstrated an inconsistent trend, reaching a peak of US$ 6,297 million in 2021 before experiencing a severe decline to US$ 2,342 million in 2022. This represents a reduction of approximately 62.6% in operating income within a single fiscal year.
- Operating Profit Margin Analysis
- The operating profit margin fluctuated between 15.36% and 22.03% from 2019 through 2021. A critical downturn occurred in 2022, with the margin falling to 7.77%, the lowest point in the analyzed period. The divergence between record-high revenues in 2022 and a record-low profit margin suggests a significant increase in operating expenses that outpaced revenue gains.
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Net Profit Margin
Paramount Global, net profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to Paramount | 1,104) | 4,543) | 2,422) | 3,308) | 1,960) | |
| Revenues | 30,154) | 28,586) | 25,285) | 27,812) | 14,514) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 3.66% | 15.89% | 9.58% | 11.89% | 13.50% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Alphabet Inc. | 21.20% | 29.51% | — | — | — | |
| Comcast Corp. | 4.42% | 12.17% | — | — | — | |
| Meta Platforms Inc. | 19.90% | 33.38% | — | — | — | |
| Netflix Inc. | 14.21% | 17.23% | — | — | — | |
| Walt Disney Co. | 3.80% | 2.96% | -4.38% | — | — | |
| Net Profit Margin, Sector | ||||||
| Media & Entertainment | 15.14% | 23.20% | — | — | — | |
| Net Profit Margin, Industry | ||||||
| Communication Services | 11.47% | 18.71% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net profit margin = 100 × Net earnings attributable to Paramount ÷ Revenues
= 100 × 1,104 ÷ 30,154 = 3.66%
2 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by a significant expansion in top-line revenue accompanied by high volatility in net profitability. While revenues have grown substantially over the five-year period, the ability to convert those revenues into net profit has fluctuated considerably, culminating in a sharp decline in the final year of the analysis.
- Revenue Trajectory
- A substantial increase in revenues occurred between 2018 and 2019, where figures rose from 14,514 million US$ to 27,812 million US$. Following this initial surge, revenues remained relatively stable, fluctuating between 25,285 million US$ in 2020 and peaking at 30,154 million US$ in 2022. This indicates a successful expansion of the scale of operations, though growth slowed after the 2019 peak.
- Net Profit Margin Trends
- The net profit margin exhibited an unstable trend over the period. Starting at 13.50% in 2018, the margin experienced a steady decline through 2020, reaching a low of 9.58%. A significant recovery was observed in 2021, where the margin peaked at 15.89%, the highest point in the recorded period. However, 2022 saw a severe contraction, with the margin falling to 3.66%, representing a drastic reduction in operational efficiency and profitability relative to revenue.
- Net Earnings Analysis
- Net earnings attributable to the company mirrored the volatility of the profit margins. Earnings grew from 1,960 million US$ in 2018 to a peak of 4,543 million US$ in 2021. Despite the record-high revenues achieved in 2022, net earnings plummeted to 1,104 million US$. This divergence between increasing revenue and decreasing net earnings suggests a substantial increase in operating costs or non-operating expenses during the 2022 fiscal year.
In summary, the data reveals a pattern of revenue growth that has not translated into sustainable profit margin expansion. The sharp decline in both net earnings and net profit margin in 2022, despite reaching peak revenue levels, indicates a significant erosion of profitability that deviates from the performance trends observed between 2018 and 2021.
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Return on Equity (ROE)
Paramount Global, ROE calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to Paramount | 1,104) | 4,543) | 2,422) | 3,308) | 1,960) | |
| Total Paramount stockholders’ equity | 23,036) | 22,402) | 15,371) | 13,207) | 2,804) | |
| Profitability Ratio | ||||||
| ROE1 | 4.79% | 20.28% | 15.76% | 25.05% | 69.90% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Alphabet Inc. | 23.41% | 30.22% | — | — | — | |
| Comcast Corp. | 6.63% | 14.73% | — | — | — | |
| Meta Platforms Inc. | 18.45% | 31.53% | — | — | — | |
| Netflix Inc. | 21.62% | 32.28% | — | — | — | |
| Walt Disney Co. | 3.31% | 2.25% | -3.43% | — | — | |
| ROE, Sector | ||||||
| Media & Entertainment | 16.62% | 23.69% | — | — | — | |
| ROE, Industry | ||||||
| Communication Services | 13.32% | 20.34% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROE = 100 × Net earnings attributable to Paramount ÷ Total Paramount stockholders’ equity
= 100 × 1,104 ÷ 23,036 = 4.79%
2 Click competitor name to see calculations.
The analysis of profitability ratios from 2018 to 2022 reveals a significant decline in the efficiency of equity utilization. The Return on Equity (ROE) experienced a sharp downward trajectory, falling from a high of 69.90% in 2018 to 4.79% by the end of 2022.
- Equity Base Expansion
- A substantial and consistent increase in total stockholders' equity is observed, growing from 2,804 million US$ in 2018 to 23,036 million US$ in 2022. This represents a nearly nine-fold increase in the capital base over the five-year period, which acted as a primary driver for the compression of the ROE by increasing the denominator of the ratio.
- Net Earnings Volatility
- Net earnings attributable to the company exhibited significant instability throughout the period. While earnings grew from 1,960 million US$ in 2018 to a peak of 4,543 million US$ in 2021, a severe contraction occurred in 2022, with earnings falling to 1,104 million US$. This sharp decline in net income, occurring simultaneously with an expanded equity base, accelerated the deterioration of profitability ratios.
- Return on Equity Correlation
- The ROE demonstrates a pattern of rapid erosion characterized by two distinct phases. Between 2018 and 2020, the ROE dropped from 69.90% to 15.76% as the equity base expanded rapidly. A temporary recovery to 20.28% in 2021 was driven by a spike in net earnings; however, this gain was reversed in 2022, resulting in a record low ROE of 4.79% due to the combination of falling earnings and continued equity growth.
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Return on Assets (ROA)
Paramount Global, ROA calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to Paramount | 1,104) | 4,543) | 2,422) | 3,308) | 1,960) | |
| Total assets | 58,393) | 58,620) | 52,663) | 49,519) | 21,859) | |
| Profitability Ratio | ||||||
| ROA1 | 1.89% | 7.75% | 4.60% | 6.68% | 8.97% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Alphabet Inc. | 16.42% | 21.16% | — | — | — | |
| Comcast Corp. | 2.09% | 5.13% | — | — | — | |
| Meta Platforms Inc. | 12.49% | 23.72% | — | — | — | |
| Netflix Inc. | 9.24% | 11.48% | — | — | — | |
| Walt Disney Co. | 1.54% | 0.98% | -1.42% | — | — | |
| ROA, Sector | ||||||
| Media & Entertainment | 9.07% | 13.02% | — | — | — | |
| ROA, Industry | ||||||
| Communication Services | 5.43% | 8.36% | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
ROA = 100 × Net earnings attributable to Paramount ÷ Total assets
= 100 × 1,104 ÷ 58,393 = 1.89%
2 Click competitor name to see calculations.
The analysis of profitability metrics from 2018 to 2022 reveals a general decline in asset utilization efficiency, characterized by significant volatility in net earnings and a substantial expansion of the asset base.
- Asset Base Expansion
- A sharp increase in total assets is observed between 2018 and 2019, where the value rose from 21,859 million US$ to 49,519 million US$. This growth continued steadily through 2021, peaking at 58,620 million US$ before stabilizing slightly in 2022 at 58,393 million US$. The rapid scaling of the balance sheet created a higher threshold for earnings to maintain consistent return ratios.
- Net Earnings Volatility
- Net earnings attributable to the entity exhibited significant fluctuations over the five-year period. While earnings grew from 1,960 million US$ in 2018 to a peak of 4,543 million US$ in 2021, this growth was non-linear, featuring a dip in 2020. A severe contraction occurred in 2022, with net earnings falling to 1,104 million US$, representing the lowest earnings level since 2018 despite the asset base remaining at its highest levels.
- Return on Assets (ROA) Trend
- The ROA reflects the combined impact of asset growth and earnings volatility, showing a downward trajectory with a temporary recovery. The ratio declined from 8.97% in 2018 to 4.60% in 2020, primarily due to asset growth outpacing earnings. A recovery to 7.75% was achieved in 2021, driven by a surge in net earnings. However, this recovery was short-lived, as the ROA plummeted to 1.89% in 2022, indicating a significant decrease in the ability of the entity to generate profit from its total assets.
In summary, the period is marked by a substantial increase in the company's scale that was not matched by sustainable earnings growth. The precipitous drop in ROA by the end of 2022 suggests a marked decline in operational efficiency and profitability relative to the invested capital base.
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