Baxter International Inc. (NYSE:BAX)

The financial data exhibits notable shifts over the five-year period from 2011 to 2015 with respect to profitability, cost management, and income components.

Gross Margin and Cost of Sales

The gross margin percentage declines steadily from 50.72% in 2011 to 41.59% in 2015, indicating increasing cost pressures or reduced pricing power. This decrease aligns with a rise in the cost of sales from approximately 49.28% to 58.41% of net sales, showing that the cost structure has become less favorable over the years.

Operating Expenses

Marketing and administrative expenses have increased as a percentage of net sales, climbing from 22.7% in 2011 to 31.04% in 2015, suggesting heavier spending in these areas relative to revenue. Research and development expenses, after increasing slightly from 6.81% in 2011 to over 8% in 2013 and 2014, decline in 2015 to 6.05%, indicating a possible strategic shift or cost-cutting in R&D efforts.

Operating and Net Income

Operating income as a share of net sales shows a marked decline from 21.2% in 2011 down to 4.5% in 2015, reflecting the combined effects of increased costs and expenses outpacing revenue growth. This significant downward trend mirrors weakening operational profitability.

Interest and Other Income/Expenses

Net interest expense worsens over time, increasing from -0.39% in 2011 to -1.26% in 2015, indicative of either higher debt levels or increasing borrowing costs. Other income and expense as a net figure fluctuates but ends higher at 1.05% in 2015 compared with a negative position (-0.6%) in 2011, partly influenced by gains from foreign exchange, litigation settlements, and disposal of assets in the final years.

Income Before and After Tax

Income from continuing operations before income taxes trails downward from over 20% in 2011-2012 to 4.29% in 2015, consistent with the decline in operating income. Income tax expense proportionally falls from nearly 4% to 0.35%, which could reflect changes in tax planning or lower taxable income. Consequently, income from continuing operations declines sharply from 16.24% to just under 4% by 2015.

Discontinued Operations and Net Income

Starting in 2014, income from discontinued operations appears, contributing positively at 3.31% and increasing to 5.77% in 2015, which partially offsets the reduced income from continuing operations. Overall net income decreases from 16.24% in 2011 to 9.71% in 2015, demonstrating a deteriorated profit performance despite the contribution from discontinued operations.

Attributable Net Income

Net income attributable to the company follows the same downward trajectory as overall net income, reducing from 16.01% in 2011 to 9.71% in 2015, signaling diminished returns available to shareholders.

In summary, the data indicates rising production and operating costs leading to diminished margins and earnings. While some gains from other income components and discontinued operations provide limited relief, overall profitability has weakened substantially by the end of the period. The increasing marketing and administrative expense ratio alongside worsening net interest expense highlights areas that may have adversely impacted operational efficiency and financial leverage.