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
Apache Corp., profitability ratios
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
The financial performance from 2011 to 2015 reflects a severe erosion of profitability, characterized by a transition from strong positive margins to substantial net losses. While the initial years showed stability, a critical downturn accelerated between 2013 and 2015, resulting in extreme negative values across all key profitability indicators.
- Profit Margin Analysis
- The gross profit margin experienced a steady decline, moving from 82.74% in 2011 to 67.65% in 2015. In contrast, the operating and net profit margins suffered far more drastic collapses. The operating profit margin fell from 48.62% in 2011 to -20.93% in 2014, reaching -437.26% by 2015. The net profit margin followed a similar trajectory, plummeting from 27.27% in 2011 to -362.20% in 2015, suggesting that operating expenses and other losses grew exponentially relative to revenue.
- Return on Capital and Assets
- Return on Equity (ROE) and Return on Assets (ROA) both shifted from positive growth to severe deficits. ROE decreased from 15.81% in 2011 to a deficit of -900.97% in 2015. Simultaneously, ROA declined from 8.81% in 2011 to -122.70% in 2015. This pattern indicates a total breakdown in the efficiency of asset utilization and a failure to generate value for shareholders during the final two years of the period.
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Gross Profit Margin
Apache Corp., gross profit margin calculation
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Gross profit margin = 100 × Gross profit ÷ Oil and gas production revenues
= 100 × 4,318 ÷ 6,383 = 67.65%
A consistent downward trajectory in profitability is observed between 2011 and 2015, characterized by a severe contraction in the final year of the period. While the initial decline was gradual, the latter part of the period indicates a significant erosion of both top-line revenue and overall gross profit.
- Gross Profit Trend
- Gross profit experienced a steady decline from 13,909 million US$ in 2011 to 10,997 million US$ in 2014. This decline accelerated sharply in 2015, where gross profit fell to 4,318 million US$, representing a reduction of approximately 60.7% compared to the previous year.
- Revenue Performance
- Oil and gas production revenues remained relatively stable between 2011 and 2013, peaking slightly in 2012 at 16,947 million US$. A significant downward shift began in 2014 with revenues dropping to 13,749 million US$, followed by a precipitous collapse to 6,383 million US$ by December 31, 2015.
- Gross Profit Margin Analysis
- The gross profit margin exhibited a gradual compression from 82.74% in 2011 to 79.56% in 2013. Although the margin stabilized marginally at 79.98% in 2014, it suffered a substantial drop to 67.65% in 2015. This indicates that the cost of production increased relative to revenue or that the company was unable to reduce its cost base in proportion to the sharp decline in sales during the final year.
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Operating Profit Margin
Apache Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) | (27,910) | (2,878) | 4,738) | 4,911) | 8,173) | |
| Oil and gas production revenues | 6,383) | 13,749) | 16,402) | 16,947) | 16,810) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | -437.26% | -20.93% | 28.89% | 28.98% | 48.62% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Oil and gas production revenues
= 100 × -27,910 ÷ 6,383 = -437.26%
2 Click competitor name to see calculations.
The financial performance from 2011 to 2015 is characterized by a severe contraction in profitability and a substantial deterioration of operational efficiency. A transition from high profitability to significant operational losses is evident over this five-year period.
- Oil and Gas Production Revenues
- Revenues remained relatively stable between 2011 and 2013, fluctuating within a narrow range around 16 billion US$. However, a sharp downward trend emerged in 2014, with revenues falling to 13,749 million US$, followed by a precipitous decline to 6,383 million US$ in 2015, reflecting a substantial loss of top-line generation.
- Operating Income (Loss)
- Operating income experienced a steady decline from a peak of 8,173 million US$ in 2011 to 4,738 million US$ in 2013. The trajectory shifted to a deficit in 2014 with a loss of 2,878 million US$, which escalated dramatically to a loss of 27,910 million US$ by the end of 2015.
- Operating Profit Margin
- The operating profit margin shifted from a robust 48.62% in 2011 to approximately 29% during 2012 and 2013. This margin collapsed into negative territory in 2014 at -20.93%, eventually reaching an extreme deficit of -437.26% in 2015. This indicates that operating expenses grew disproportionately relative to the declining revenue stream, leading to a critical failure in operational profitability.
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Net Profit Margin
Apache Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Apache shareholders | (23,119) | (5,403) | 2,232) | 2,001) | 4,584) | |
| Oil and gas production revenues | 6,383) | 13,749) | 16,402) | 16,947) | 16,810) | |
| Profitability Ratio | ||||||
| Net profit margin1 | -362.20% | -39.30% | 13.61% | 11.81% | 27.27% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Net profit margin = 100 × Net income (loss) attributable to Apache shareholders ÷ Oil and gas production revenues
= 100 × -23,119 ÷ 6,383 = -362.20%
2 Click competitor name to see calculations.
The financial performance from 2011 to 2015 is characterized by a severe deterioration in profitability and a sharp contraction in top-line revenue. The period reflects a transition from strong positive earnings to substantial net losses, culminating in an extreme collapse of the net profit margin by the end of the period.
- Revenue Performance
- Oil and gas production revenues remained relatively stable between 2011 and 2013, fluctuating within a narrow range from 16.4 billion USD to 16.9 billion USD. A significant downward trend emerged in 2014, with revenues dropping to 13.7 billion USD, followed by a precipitous decline to 6.38 billion USD in 2015, representing a total reduction of approximately 62% from the 2011 peak.
- Net Income Trajectory
- Net income attributable to shareholders showed a consistent decline in the early part of the period, falling from 4.58 billion USD in 2011 to 2.0 billion USD in 2012. After a slight recovery to 2.23 billion USD in 2013, the company experienced a pivot to negative earnings. A loss of 5.4 billion USD was recorded in 2014, which escalated to a massive net loss of 23.1 billion USD in 2015.
- Net Profit Margin Analysis
- The net profit margin experienced extreme volatility and a catastrophic decline. The margin fell from 27.27% in 2011 to 11.81% in 2012, with a marginal improvement to 13.61% in 2013. By 2014, the margin shifted to -39.30%, and by 2015, it reached -362.20%. This trajectory indicates that the growth in losses far outpaced the decline in revenue, suggesting significant non-operating charges or impairment losses during the final two years.
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Return on Equity (ROE)
Apache Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Apache shareholders | (23,119) | (5,403) | 2,232) | 2,001) | 4,584) | |
| Total Apache shareholders’ equity | 2,566) | 25,937) | 33,396) | 31,331) | 28,993) | |
| Profitability Ratio | ||||||
| ROE1 | -900.97% | -20.83% | 6.68% | 6.39% | 15.81% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
ROE = 100 × Net income (loss) attributable to Apache shareholders ÷ Total Apache shareholders’ equity
= 100 × -23,119 ÷ 2,566 = -900.97%
2 Click competitor name to see calculations.
The financial performance between 2011 and 2015 is characterized by a severe deterioration in profitability and a catastrophic collapse of shareholder value. A transition is observed from a period of positive returns to extreme net losses and capital erosion.
- Net Income Trends
- Positive net income was recorded from 2011 to 2013, though a significant decline occurred between 2011 (US$ 4,584 million) and 2012 (US$ 2,001 million), followed by marginal stability in 2013 (US$ 2,232 million). This trend reversed sharply in 2014 with a loss of US$ 5,403 million, which escalated to a critical loss of US$ 23,119 million in 2015.
- Shareholders' Equity Evolution
- The equity base expanded from US$ 28,993 million in 2011 to a peak of US$ 33,396 million in 2013. Subsequently, a rapid depletion of equity occurred, falling to US$ 25,937 million in 2014 and collapsing to US$ 2,566 million by the end of 2015, representing a substantial loss of book value.
- Return on Equity (ROE) Interpretation
- The ROE exhibited a precipitous downward trajectory, falling from 15.81% in 2011 to 6.39% in 2012, and remaining relatively stagnant at 6.68% in 2013. The ratio turned negative in 2014 (-20.83%) and reached an extreme outlier of -900.97% in 2015. This final figure is the result of an immense net loss occurring simultaneously with a heavily diminished equity base, indicating an unsustainable financial position during that period.
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Return on Assets (ROA)
Apache Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Apache shareholders | (23,119) | (5,403) | 2,232) | 2,001) | 4,584) | |
| Total assets | 18,842) | 55,952) | 61,637) | 60,737) | 52,051) | |
| Profitability Ratio | ||||||
| ROA1 | -122.70% | -9.66% | 3.62% | 3.29% | 8.81% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
ROA = 100 × Net income (loss) attributable to Apache shareholders ÷ Total assets
= 100 × -23,119 ÷ 18,842 = -122.70%
2 Click competitor name to see calculations.
A severe decline in financial performance is observed over the five-year period from 2011 to 2015, characterized by a transition from profitability to substantial losses and a significant contraction of the asset base.
- Net Income Trends
- A downward trajectory in net income is evident, starting at US$ 4,584 million in 2011 and falling to US$ 2,001 million in 2012. Following a slight increase to US$ 2,232 million in 2013, the company experienced a sharp reversal into negative territory, reporting a net loss of US$ 5,403 million in 2014, which deepened significantly to a loss of US$ 23,119 million by 2015.
- Total Asset Fluctuations
- The asset base grew from US$ 52,051 million in 2011 to a peak of US$ 61,637 million in 2013. This growth was followed by a reduction to US$ 55,952 million in 2014 and a precipitous decline to US$ 18,842 million in 2015, indicating a massive reduction in total assets during the final year of the period.
- Return on Assets (ROA) Analysis
- The ROA mirrors the volatility of net income and the contraction of assets. A strong initial ROA of 8.81% in 2011 declined to 3.29% in 2012 and 3.62% in 2013. The ratio turned negative in 2014 at -9.66% and reached an extreme low of -122.70% in 2015, reflecting the combined impact of an intensified net loss and a severely diminished asset base.
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