Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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- Balance Sheet: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Long-term Activity Ratios (Summary)
Abbott Laboratories, long-term (investment) activity ratios
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
An examination of long-term activity ratios reveals consistent, though generally declining, trends across the observed period. The ratios suggest a decreasing efficiency in asset utilization over the five years presented. These trends are evident in both fixed asset and overall asset turnover metrics.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio decreased from 4.81 in 2021 to 3.75 in 2025. The decline was relatively gradual from 2021 to 2023, falling from 4.81 to 3.95, and then remained relatively stable between 2023 and 2024 at 3.94 before decreasing further to 3.75 in 2025. This indicates a diminishing ability to generate revenue from fixed assets over time.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- A similar downward trend is observed when including operating lease and right-of-use assets in the calculation, moving from 4.26 in 2021 to 3.43 in 2025. The pattern mirrors that of the standard net fixed asset turnover, with a more pronounced decrease from 3.56 in 2023 to 3.43 in 2025. This suggests that the inclusion of these assets does not alter the overall trend of decreasing efficiency.
- Total Asset Turnover
- The total asset turnover ratio experienced a decline from 0.57 in 2021 to 0.51 in 2025. The decrease was incremental each year, indicating a consistent, albeit slow, reduction in revenue generated per dollar of total assets. The most significant decrease occurred between 2023 and 2024, falling from 0.55 to 0.52.
- Equity Turnover
- The equity turnover ratio demonstrates the most substantial decline among the ratios examined, decreasing from 1.20 in 2021 to 0.85 in 2025. The rate of decline accelerated in later years, with a more significant drop from 0.88 in 2024 to 0.85 in 2025. This suggests a decreasing ability to generate revenue relative to the amount of equity invested in the business.
Collectively, these ratios point to a weakening trend in asset utilization efficiency. The consistent declines across multiple metrics suggest this is not an isolated phenomenon but rather a broader pattern impacting the company’s operational performance.
Net Fixed Asset Turnover
Abbott Laboratories, net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Net property and equipment | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net fixed asset turnover = Net sales ÷ Net property and equipment
= ÷ =
2 Click competitor name to see calculations.
The net fixed asset turnover ratio decreased consistently over the five-year period. While net sales experienced fluctuations, the growth in net property and equipment outpaced sales changes, contributing to the declining turnover ratio.
- Net Fixed Asset Turnover Trend
- The net fixed asset turnover ratio began at 4.81 in 2021 and decreased to 3.75 in 2025. This represents a cumulative decline of approximately 22.04% over the period. The most significant single-year decrease occurred between 2021 and 2022, followed by a substantial drop between 2022 and 2023.
- Sales Performance
- Net sales increased from US$43,075 million in 2021 to US$43,653 million in 2022, representing a modest increase. A decrease to US$40,109 million was observed in 2023, followed by a recovery to US$41,950 million in 2024, and further growth to US$44,328 million in 2025. Despite the overall increase in sales from 2021 to 2025, the rate of sales growth did not consistently offset the increase in fixed assets.
- Fixed Asset Investment
- Net property and equipment increased steadily throughout the period, from US$8,959 million in 2021 to US$11,816 million in 2025. This represents a cumulative increase of approximately 32.18%. The consistent investment in fixed assets, without a corresponding proportional increase in sales, is a primary driver of the declining net fixed asset turnover ratio.
The observed trend suggests that the company is becoming less efficient in generating sales from its fixed asset base. This could be due to a number of factors, including increased investment in capacity that has not yet translated into higher sales, or a shift in business strategy towards less asset-intensive activities. Further investigation would be required to determine the underlying causes and potential implications of this trend.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Abbott Laboratories, net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Net property and equipment | ||||||
| Operating lease, ROU asset (included in Deferred income taxes and other assets) | ||||||
| Net property and equipment (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Health Care Equipment & Services | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Net property and equipment (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
The net fixed asset turnover ratio, calculated using net sales and net property, plant, and equipment (including operating lease and right-of-use assets), demonstrates a declining trend over the five-year period. While net sales experienced fluctuations, the growth in net property, plant, and equipment consistently outpaced sales increases, contributing to this trend.
- Overall Trend
- The net fixed asset turnover ratio decreased from 4.26 in 2021 to 3.43 in 2025. This indicates a diminishing efficiency in generating sales from the company’s fixed asset base.
- Initial Period (2021-2022)
- From 2021 to 2022, the ratio remained relatively stable, fluctuating minimally between 4.26 and 4.25. Net sales increased slightly, while net property, plant, and equipment also saw a modest rise, maintaining a consistent level of asset utilization.
- Decline (2022-2025)
- A noticeable decline began in 2023, with the ratio falling to 3.56. This coincided with a decrease in net sales and a continued increase in net property, plant, and equipment. The ratio experienced a slight recovery to 3.58 in 2024, but continued its downward trajectory, reaching 3.43 in 2025. The increasing investment in fixed assets, coupled with slower sales growth in the latter years, drove this decline.
- Asset Investment
- Net property, plant, and equipment consistently increased throughout the period, rising from US$10,112 million in 2021 to US$12,942 million in 2025. This suggests ongoing investment in fixed assets, potentially for expansion or modernization. However, the corresponding increase in sales was insufficient to maintain the previous levels of asset turnover.
- Sales Performance
- Net sales decreased in 2023, then increased in 2024 and 2025, but the growth rate was not sufficient to offset the increase in fixed assets. The peak in sales occurred in 2025 at US$44,328 million, but this was not enough to reverse the declining trend in the asset turnover ratio.
The observed trend suggests that the company is becoming less efficient in utilizing its fixed assets to generate revenue. Further investigation may be warranted to understand the reasons behind the increasing asset base and the slower sales growth, and to assess the potential impact on future profitability.
Total Asset Turnover
Abbott Laboratories, total asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Total Asset Turnover, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Total Asset Turnover, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The total asset turnover ratio exhibited a declining trend over the five-year period. Initially, the ratio stood at 0.57 in 2021, increased slightly to 0.59 in 2022, and then consistently decreased through 2025, reaching 0.51.
- Net Sales Performance
- Net sales demonstrated fluctuations during the period. A modest increase was observed from 2021 to 2022, followed by a decrease in 2023. Sales recovered in 2024 and continued to rise in 2025, ultimately exceeding the 2021 level. However, the growth in sales did not offset the changes in asset levels to maintain or improve the asset turnover ratio.
- Total Asset Levels
- Total assets experienced a slight decrease from 2021 to 2023, before increasing significantly in 2024 and continuing to grow in 2025. The increase in total assets, particularly in the later years, appears to be a primary driver of the declining asset turnover ratio.
- Total Asset Turnover Trend
- The observed decline in the total asset turnover ratio suggests a decreasing efficiency in utilizing assets to generate sales. While sales increased overall from 2021 to 2025, the rate of asset growth outpaced sales growth, resulting in a lower ratio. A ratio of 0.51 indicates that for every dollar of assets, the company generates approximately 51 cents in sales. The initial ratio of 0.57 suggests a comparatively more efficient asset utilization in 2021.
The combination of fluctuating sales and increasing asset levels contributed to the overall downward trend in the total asset turnover ratio. Further investigation into the composition of asset increases and the factors influencing sales performance would be necessary to fully understand the underlying causes of this trend.
Equity Turnover
Abbott Laboratories, equity turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Total Abbott shareholders’ investment | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Equity Turnover, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Equity Turnover, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Equity turnover = Net sales ÷ Total Abbott shareholders’ investment
= ÷ =
2 Click competitor name to see calculations.
The equity turnover ratio demonstrates a declining trend over the five-year period. Initially, the ratio stood at 1.20 in 2021 and decreased to 0.85 by 2025. This indicates a diminishing efficiency in generating sales relative to the investment made by shareholders.
- Equity Turnover Trend
- From 2021 to 2022, the equity turnover ratio experienced a slight decrease from 1.20 to 1.19, suggesting a minimal change in sales generation efficiency relative to shareholder investment during that period. A more pronounced decline occurred between 2022 and 2023, with the ratio falling to 1.04. This suggests a weakening relationship between sales and equity investment. The rate of decline accelerated from 2023 to 2024, dropping to 0.88, and continued to 0.85 in 2025.
Concurrently, net sales exhibited fluctuations. While net sales increased modestly from 2021 to 2022, they decreased in 2023 before recovering somewhat in 2024 and increasing again in 2025. However, the growth in net sales did not keep pace with the growth in total shareholder investment, contributing to the observed decline in equity turnover.
- Shareholder Investment Impact
- Total shareholder investment consistently increased throughout the period, rising from US$35,802 million in 2021 to US$52,130 million in 2025. This substantial increase in equity base, coupled with the relatively slower growth in net sales, directly contributed to the decreasing equity turnover ratio. The increasing investment without a proportional increase in sales suggests a potential need to evaluate the effectiveness of capital allocation strategies.
The consistent decrease in equity turnover warrants further investigation. While a lower ratio does not necessarily indicate poor performance, it suggests that a larger investment of shareholder equity is required to generate each dollar of sales. This could be due to various factors, including changes in operational efficiency, increased working capital requirements, or strategic investments that have not yet translated into proportional sales growth.