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
Baxter International Inc., 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).
Between 2011 and 2015, a general deterioration in profitability is observed, characterized by a period of relative stability followed by a significant contraction in all key performance indicators during the final year.
- Margin Analysis
- Gross profit margin remained relatively stable, fluctuating between 48.93% and 51.45% from 2011 to 2014, before experiencing a sharp decline to 41.59% in 2015. A more consistent downward trajectory is evident in the operating profit margin, which decreased from 21.20% in 2011 to 16.24% in 2014, culminating in a precipitous drop to 4.50% in 2015. Net profit margin exhibited moderate fluctuations between 13.19% and 16.39% during the first four years, before falling to 9.71% in 2015.
- Asset and Equity Efficiency
- Return on equity (ROE) showed substantial volatility, maintaining levels above 33% in 2011 and 2012, dipping to 23.77% in 2013, and recovering to 30.75% in 2014, before collapsing to 10.94% in 2015. Return on assets (ROA) followed a similar pattern of decline, starting at 11.66% in 2011 and ending at 4.62% in 2015, indicating a diminished ability to generate earnings from the total asset base.
The synchronization of declines across all profitability metrics in 2015 suggests a severe impact on operational efficiency and bottom-line performance, likely driven by a combination of narrowing gross margins and a substantial increase in operating expenses.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Gross Profit Margin
Baxter International Inc., gross 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) | ||||||
| Gross margin | 4,146) | 8,157) | 7,595) | 7,301) | 7,046) | |
| Net sales | 9,968) | 16,671) | 15,259) | 14,190) | 13,893) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 41.59% | 48.93% | 49.77% | 51.45% | 50.72% | |
| Benchmarks | ||||||
| Gross Profit Margin, 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
Gross profit margin = 100 × Gross margin ÷ Net sales
= 100 × 4,146 ÷ 9,968 = 41.59%
2 Click competitor name to see calculations.
The analysis of profitability ratios from 2011 to 2015 reveals a period of consistent growth in volume followed by a sharp contraction in both revenue and margin efficiency in the final year of the period.
- Net Sales and Gross Margin Trends
- From 2011 to 2014, net sales experienced a steady upward trajectory, increasing from 13,893 million US$ to 16,671 million US$. Gross margin followed a similar growth pattern during this interval, rising from 7,046 million US$ to a peak of 8,157 million US$ in 2014. This growth trend was abruptly reversed in 2015, where net sales dropped to 9,968 million US$ and gross margin fell to 4,146 million US$, representing a significant reduction in scale.
- Gross Profit Margin Percentage
- The gross profit margin percentage peaked in 2012 at 51.45%. Between 2012 and 2014, a gradual erosion of the margin is observed, with the percentage declining to 49.77% in 2013 and further to 48.93% in 2014. This indicates that while sales were increasing, the cost of goods sold was growing at a slightly faster rate. This downward trend accelerated severely in 2015, with the margin falling to 41.59%.
- Profitability Correlation
- The data shows an inverse relationship between sales volume and margin percentage between 2012 and 2014, where increasing net sales were accompanied by a slight compression of the gross profit margin. The precipitous decline in 2015 across all three metrics suggests a fundamental shift in the operational landscape, potentially due to large-scale divestitures or a substantial increase in production costs relative to pricing power.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Operating Profit Margin
Baxter International Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | 449) | 2,707) | 2,668) | 2,821) | 2,946) | |
| Net sales | 9,968) | 16,671) | 15,259) | 14,190) | 13,893) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 4.50% | 16.24% | 17.48% | 19.88% | 21.20% | |
| Benchmarks | ||||||
| Operating Profit Margin, 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
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 449 ÷ 9,968 = 4.50%
2 Click competitor name to see calculations.
A sustained decline in operational efficiency is evident over the five-year period from 2011 to 2015. Despite initial growth in top-line revenue, there was a consistent contraction in the ability to convert sales into operating profit, culminating in a severe reduction in both revenue and profitability in the final year of the analyzed period.
- Net Sales Performance
- Net sales exhibited a steady upward trajectory between 2011 and 2014, growing from 13,893 million to 16,671 million. This growth phase was followed by a sharp contraction in 2015, where sales fell to 9,968 million, indicating a significant reduction in the company's scale of operations.
- Operating Income Trends
- Operating income experienced a general decline throughout the period. After peaking at 2,946 million in 2011, it trended downward to 2,668 million by 2013, with a marginal recovery to 2,707 million in 2014. A precipitous drop occurred in 2015, with operating income falling to 449 million.
- Operating Profit Margin Analysis
- The operating profit margin shows a persistent year-over-year compression. The margin decreased from 21.20% in 2011 to 16.24% in 2014, suggesting that operating expenses grew at a faster rate than net sales during the expansion period. This downward trend intensified dramatically in 2015, with the margin collapsing to 4.50%, highlighting a critical degradation in operational profitability.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Net Profit Margin
Baxter International Inc., 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 attributable to Baxter | 968) | 2,497) | 2,012) | 2,326) | 2,224) | |
| Net sales | 9,968) | 16,671) | 15,259) | 14,190) | 13,893) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 9.71% | 14.98% | 13.19% | 16.39% | 16.01% | |
| Benchmarks | ||||||
| Net Profit Margin, 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 profit margin = 100 × Net income attributable to Baxter ÷ Net sales
= 100 × 968 ÷ 9,968 = 9.71%
2 Click competitor name to see calculations.
The profitability of Baxter International Inc. exhibited volatility between 2011 and 2015, characterized by a period of relative stability and gradual growth followed by a sharp contraction in the final year of the observed period.
- Net Profit Margin Trends
- The net profit margin reached a peak of 16.39% in 2012, up from 16.01% in 2011. A subsequent decline to 13.19% was recorded in 2013, followed by a partial recovery to 14.98% in 2014. By December 31, 2015, the margin dropped significantly to 9.71%, marking the lowest profitability level within the five-year timeframe.
- Revenue and Income Dynamics (2011-2014)
- A positive correlation between net sales and net income was observed from 2011 through 2014. Net sales grew steadily from 13,893 million to a peak of 16,671 million. During this same interval, net income attributable to the company generally trended upward, reaching its highest value of 2,497 million in 2014, despite a brief dip in 2013.
- Fiscal Year 2015 Performance Analysis
- A substantial contraction in financial performance occurred in 2015. Net sales plummeted to 9,968 million, and net income fell to 968 million. This sharp decrease in both revenue and earnings resulted in a significant erosion of the net profit margin, which fell by 5.27 percentage points compared to 2014 levels.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Return on Equity (ROE)
Baxter International Inc., 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 attributable to Baxter | 968) | 2,497) | 2,012) | 2,326) | 2,224) | |
| Total Baxter shareholders’ equity | 8,846) | 8,120) | 8,463) | 6,938) | 6,585) | |
| Profitability Ratio | ||||||
| ROE1 | 10.94% | 30.75% | 23.77% | 33.53% | 33.77% | |
| Benchmarks | ||||||
| ROE, 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
ROE = 100 × Net income attributable to Baxter ÷ Total Baxter shareholders’ equity
= 100 × 968 ÷ 8,846 = 10.94%
2 Click competitor name to see calculations.
Between 2011 and 2015, the company's ability to generate profit from its shareholders' equity exhibited significant volatility, concluding with a substantial decline in efficiency. While the initial period was characterized by high and stable returns, a sharp deterioration occurred in the final year of the analysis.
- Return on Equity (ROE) Trends
- The ROE remained consistently high during 2011 and 2012, maintaining levels of 33.77% and 33.53%, respectively. A notable decline occurred in 2013, with the ratio dropping to 23.77%, before recovering to 30.75% in 2014. The period ended with a precipitous decrease in 2015, where ROE fell to 10.94%, marking the lowest point in the five-year sequence.
- Net Income Performance
- Net income attributable to the company showed fluctuation between 2011 and 2014, peaking at 2,497 million US dollars in 2014. The significant collapse in ROE observed in 2015 is primarily driven by a drastic reduction in net income, which fell to 968 million US dollars, representing a decline of approximately 61% from the prior year's peak.
- Shareholders' Equity Growth
- Total shareholders' equity demonstrated a general upward trajectory, growing from 6,585 million US dollars in 2011 to 8,846 million US dollars in 2015. The expansion of the equity base in 2015, occurring in tandem with the sharp decline in net income, acted as a compounding factor that further suppressed the Return on Equity.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Return on Assets (ROA)
Baxter International Inc., 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 attributable to Baxter | 968) | 2,497) | 2,012) | 2,326) | 2,224) | |
| Total assets | 20,975) | 25,917) | 25,869) | 20,390) | 19,073) | |
| Profitability Ratio | ||||||
| ROA1 | 4.62% | 9.63% | 7.78% | 11.41% | 11.66% | |
| Benchmarks | ||||||
| ROA, 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
ROA = 100 × Net income attributable to Baxter ÷ Total assets
= 100 × 968 ÷ 20,975 = 4.62%
2 Click competitor name to see calculations.
An analysis of the profitability metrics from 2011 to 2015 reveals a general downward trend in the efficiency of asset utilization. The Return on Assets (ROA) declined from a peak of 11.66% in 2011 to a period low of 4.62% by the end of 2015, indicating a diminishing ability to generate earnings relative to the total asset base.
- Net Income Volatility
- Net income remained relatively stable between 2011 and 2014, fluctuating between 2,012 million and 2,497 million US dollars. However, a significant contraction occurred in 2015, where net income dropped to 968 million US dollars, representing a decrease of approximately 61% from the previous year's peak.
- Asset Base Fluctuations
- The total asset base experienced substantial growth between 2011 and 2013, increasing from 19,073 million to 25,869 million US dollars. This rapid expansion of assets without a proportional increase in net income contributed to the initial compression of the ROA in 2013.
- Return on Assets (ROA) Correlation
- The ROA showed a slight decrease between 2011 and 2012, followed by a sharp drop to 7.78% in 2013, coinciding with the surge in total assets. A partial recovery to 9.63% was observed in 2014, driven by the highest recorded net income of the period. The final decline to 4.62% in 2015 was primarily driven by the severe reduction in net income, which outweighed the simultaneous reduction in total assets.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?