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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Baxter International Inc. pages available for free this week:
- Income Statement
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Long-term Activity Ratios (Summary)
Baxter International Inc., long-term (investment) activity ratios
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Total asset turnover | ||||||
| Equity turnover |
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 analysis of the financial ratios over the five-year period reveals several key trends in asset and equity utilization.
- Net Fixed Asset Turnover
- This ratio decreased from 2.51 in 2011 to 1.92 in 2014, indicating declining efficiency in generating sales from fixed assets during this period. However, there was a noticeable recovery in 2015 when the ratio increased to 2.27, suggesting improved utilization or increased sales relative to net fixed assets in the final year observed.
- Total Asset Turnover
- A declining trend is evident, starting at 0.73 in 2011 and gradually decreasing to 0.48 by 2015. This steady decline over the years points to reduced effectiveness in using total assets to generate revenue, with the lowest turnover ratio recorded in the last year of the dataset.
- Equity Turnover
- This ratio showed a general downward trajectory from 2.11 in 2011 to 1.13 in 2015, with a slight rebound in 2014 to 2.05. The steep decline in equity turnover by 2015 indicates a reduced rate of sales generation relative to shareholders' equity, reflecting potentially diminished operational efficiency or increased equity base not matched by proportional sales growth.
Overall, the data suggest that the company experienced a reduction in the efficiency of asset and equity utilization over the period, with a brief improvement in net fixed asset turnover in the last year. The persistent decline in total asset and equity turnover ratios highlights challenges in maintaining robust asset productivity relative to sales.
Net Fixed Asset Turnover
Baxter International Inc., net fixed asset turnover 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 sales | ||||||
| Property, plant and equipment, net | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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 fixed asset turnover = Net sales ÷ Property, plant and equipment, net
= ÷ =
2 Click competitor name to see calculations.
Over the period from 2011 to 2015, the financial data indicates several notable trends and shifts in key metrics.
- Net Sales
- Net sales experienced a steady increase from 2011 through 2014, rising from 13,893 million US dollars in 2011 to 16,671 million US dollars in 2014. However, in 2015, net sales saw a significant decline, dropping to 9,968 million US dollars, representing a sharp reversal in the previous upward trend.
- Property, Plant and Equipment, Net
- Net property, plant and equipment values consistently increased from 5,525 million US dollars in 2011 to a peak of 8,698 million US dollars in 2014. In 2015, this figure fell substantially to 4,386 million US dollars, approximately halving from the prior year, which could suggest asset disposals, revaluations, or impairments.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio, which measures efficiency in utilizing fixed assets to generate sales, generally declined from 2.51 in 2011 to a low of 1.92 in 2014, indicating decreasing efficiency. In 2015, the ratio rebounded to 2.27, implying improved utilization of fixed assets despite the reduction in net sales and asset base.
Overall, the data reflects a period of growth until 2014, followed by a marked contraction in 2015 in both sales and net fixed assets. The recovery in asset turnover ratio in 2015 suggests the company may have adjusted its asset base or improved operational efficiency in response to the reduced scale of operations.
Total Asset Turnover
Baxter International Inc., total asset turnover 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 sales | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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
Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited an overall upward trend from 2011 through 2014, increasing from 13,893 million USD to 16,671 million USD. However, in 2015 there was a significant decline to 9,968 million USD, interrupting the growth pattern observed in the prior years.
- Total Assets
- Total assets showed steady growth from 2011 to 2014, rising from 19,073 million USD to 25,917 million USD. In 2015, total assets decreased to 20,975 million USD, indicating a contraction in the asset base after several years of expansion.
- Total Asset Turnover
- The total asset turnover ratio declined consistently over the period analyzed. Starting at 0.73 in 2011, it decreased to 0.7 in 2012, then to 0.59 in 2013, followed by a slight improvement to 0.64 in 2014 before dropping further to 0.48 in 2015. This decline suggests a reduction in the efficiency with which assets are being utilized to generate sales.
- Overall Trends and Insights
- From 2011 to 2014, the company expanded both in sales and asset base, but asset efficiency, as measured by total asset turnover, was decreasing, signaling potential inefficiencies or investments not immediately translating into sales. The year 2015 marked a notable reversal where both sales and total assets decreased significantly, while asset turnover fell to its lowest level in the period, indicating a period of operational and possibly financial contraction combined with reduced asset utilization efficiency.
Equity Turnover
Baxter International Inc., equity turnover 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 sales | ||||||
| Total Baxter shareholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
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
Equity turnover = Net sales ÷ Total Baxter shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data demonstrates notable variations in key metrics over the five-year period. Net sales show a generally increasing trend from 2011 to 2014, rising from 13,893 million US dollars to 16,671 million US dollars. However, there is a substantial decline in net sales in 2015, falling sharply to 9,968 million US dollars. This significant drop interrupts the previous upward momentum and represents a considerable contraction in revenue generation.
Total Baxter shareholders’ equity displays a steady upward progression throughout the period, beginning at 6,585 million US dollars in 2011 and increasing to 8,846 million US dollars by the end of 2015. Although there is some variability, particularly a slight dip in 2014 relative to 2013, the overall equity base expands, suggesting accumulated retained earnings or other equity-enhancing activities over time.
The equity turnover ratio, which reflects the efficiency of using shareholders’ equity to generate sales, exhibits a declining pattern. Starting at 2.11 in 2011, the ratio diminishes to 1.80 by 2013, then slightly recovers to 2.05 in 2014 before dropping significantly to 1.13 in 2015. This decline aligns with the sharp reduction in net sales in the final year, indicating reduced effectiveness in leveraging equity to produce sales.
- Net Sales
- Increasing from 2011 to 2014, followed by a significant decrease in 2015.
- Total Shareholders’ Equity
- Gradual increase over the five years, with a minor dip in 2014.
- Equity Turnover Ratio
- Downward trend overall, with a notable drop in 2015 reflecting lower sales relative to equity.