Return on Assets (ROA)
since 2005
Calculation
Illinois Tool Works Inc., ROA, long-term trends, calculation
| ROA | = | 100 | × | Net income1 | ÷ | Total assets1 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | 16.76% | = | 100 | × | 2,694) | ÷ | 16,077) |
| Dec 31, 2020 | 13.51% | = | 100 | × | 2,109) | ÷ | 15,612) |
| Dec 31, 2019 | 16.73% | = | 100 | × | 2,521) | ÷ | 15,068) |
| Dec 31, 2018 | 17.24% | = | 100 | × | 2,563) | ÷ | 14,870) |
| Dec 31, 2017 | 10.05% | = | 100 | × | 1,687) | ÷ | 16,780) |
| Dec 31, 2016 | 13.39% | = | 100 | × | 2,035) | ÷ | 15,201) |
| Dec 31, 2015 | 12.07% | = | 100 | × | 1,899) | ÷ | 15,729) |
| Dec 31, 2014 | 16.66% | = | 100 | × | 2,946) | ÷ | 17,678) |
| Dec 31, 2013 | 8.41% | = | 100 | × | 1,679) | ÷ | 19,966) |
| Dec 31, 2012 | 14.86% | = | 100 | × | 2,870) | ÷ | 19,309) |
| Dec 31, 2011 | 11.52% | = | 100 | × | 2,071) | ÷ | 17,984) |
| Dec 31, 2010 | 9.40% | = | 100 | × | 1,527) | ÷ | 16,250) |
| Dec 31, 2009 | 5.89% | = | 100 | × | 947) | ÷ | 16,082) |
| Dec 31, 2008 | 9.98% | = | 100 | × | 1,519) | ÷ | 15,213) |
| Dec 31, 2007 | 12.04% | = | 100 | × | 1,870) | ÷ | 15,526) |
| Dec 31, 2006 | 12.38% | = | 100 | × | 1,718) | ÷ | 13,880) |
| Dec 31, 2005 | 13.06% | = | 100 | × | 1,495) | ÷ | 11,446) |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 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), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
1 US$ in millions
Between 2005 and 2021, the company exhibited significant volatility in its asset efficiency, characterized by a deep trough during the 2009 financial crisis followed by a long-term trend toward higher returns on assets. The relationship between net income and the total asset base shifted from a period of asset expansion to one of strategic asset optimization.
- Return on Assets (ROA) Fluctuations
- ROA began at 13.06% in 2005 and experienced a steady decline to a period low of 5.89% in 2009. This decline was primarily driven by a sharp contraction in net income, which fell from 1,870 million in 2007 to 947 million in 2009. A subsequent recovery saw ROA climb to 14.86% by 2012, although another significant drop to 8.41% occurred in 2013, reflecting the cyclical nature of the company's earnings during this timeframe.
- Asset Base Optimization
- Total assets grew consistently from 11,446 million in 2005 to a peak of 19,966 million in 2013. Following this peak, a notable trend of asset reduction is observed, with the total asset base contracting to 14,870 million by 2018. This reduction in the denominator, coupled with increasing net income, served as a primary driver for the expansion of ROA in the later years of the analysis.
- Long-term Efficiency Trends
- The period from 2018 to 2021 represents a phase of enhanced operational efficiency. ROA reached a peak of 17.24% in 2018 and remained elevated, ending at 16.76% in 2021. This suggests that the company is generating higher net income per dollar of assets compared to the 2005-2013 period, indicating a more lean and productive asset structure.
- Earnings Correlation
- Net income demonstrated strong growth over the long term, rising from 1,495 million in 2005 to 2,694 million in 2021. The most significant impact on ROA was observed when net income peaks aligned with asset contractions, most notably in 2014 and 2018, leading to ROA spikes of 16.66% and 17.24%, respectively.
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Comparison to Competitors
Illinois Tool Works Inc., ROA, long-term trends, comparison to competitors
| Illinois Tool Works Inc. | Boeing Co. | Caterpillar Inc. | Eaton Corp. plc | GE Aerospace | Honeywell International Inc. | Lockheed Martin Corp. | RTX Corp. | |
|---|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | 16.76% | -3.03% | 7.84% | 6.30% | -3.28% | 8.60% | 12.41% | 2.39% |
| Dec 31, 2020 | 13.51% | -7.80% | 3.83% | 4.43% | 2.25% | 7.40% | 13.47% | -2.17% |
| Dec 31, 2019 | 16.73% | -0.48% | 7.77% | 6.74% | -1.87% | 10.47% | 13.11% | 3.96% |
| Dec 31, 2018 | 17.24% | 8.91% | 7.83% | 6.90% | -7.23% | 11.71% | 11.24% | 3.93% |
| Dec 31, 2017 | 10.05% | 8.88% | 0.98% | 9.15% | -1.53% | 2.79% | 4.30% | 4.70% |
| Dec 31, 2016 | 13.39% | 5.44% | -0.09% | 6.32% | 2.42% | 8.88% | 11.09% | 5.64% |
| Dec 31, 2015 | 12.07% | 5.48% | 2.68% | 6.38% | -1.24% | 9.67% | 7.34% | 8.70% |
| Dec 31, 2014 | 16.66% | 5.49% | 4.36% | 5.35% | 2.35% | 9.33% | 9.75% | 6.81% |
| Dec 31, 2013 | 8.41% | 4.95% | 4.46% | 5.24% | 1.99% | 8.64% | 8.24% | 6.31% |
| Dec 31, 2012 | 14.86% | 4.39% | 6.36% | 3.39% | 1.99% | 6.99% | 7.10% | 5.74% |
| Dec 31, 2011 | 11.52% | 5.02% | 6.05% | 7.55% | 1.97% | 5.19% | 7.00% | 8.10% |
| Dec 31, 2010 | 9.40% | 4.82% | 4.22% | 5.38% | 1.55% | 5.34% | 8.34% | 7.48% |
| Dec 31, 2009 | 5.89% | 2.11% | 1.49% | 2.35% | 1.41% | 5.98% | 8.61% | 6.87% |
| Dec 31, 2008 | 9.98% | 4.97% | 5.25% | 6.35% | 2.18% | 7.87% | 9.62% | 8.30% |
| Dec 31, 2007 | 12.04% | 6.91% | 6.31% | 7.40% | 2.79% | 7.23% | 10.49% | 7.74% |
| Dec 31, 2006 | 12.38% | 4.28% | 6.95% | 8.32% | 2.99% | 6.73% | 8.96% | 7.92% |
| Dec 31, 2005 | 13.06% | 4.28% | 6.06% | 7.88% | 2.43% | 5.12% | 6.58% | 6.68% |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 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), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Sector (Capital Goods)
Illinois Tool Works Inc., ROA, long-term trends, comparison to sector (capital goods)
| Illinois Tool Works Inc. | Capital Goods | |
|---|---|---|
| Dec 31, 2021 | 16.76% | 1.86% |
| Dec 31, 2020 | 13.51% | 0.80% |
| Dec 31, 2019 | 16.73% | 2.72% |
| Dec 31, 2018 | 17.24% | 1.74% |
| Dec 31, 2017 | 10.05% | 1.83% |
| Dec 31, 2016 | 13.39% | 4.09% |
| Dec 31, 2015 | 12.07% | 2.17% |
| Dec 31, 2014 | 16.66% | 3.87% |
| Dec 31, 2013 | 8.41% | 3.45% |
| Dec 31, 2012 | 14.86% | 3.30% |
| Dec 31, 2011 | 11.52% | 3.30% |
| Dec 31, 2010 | 9.40% | 2.70% |
| Dec 31, 2009 | 5.89% | 2.16% |
| Dec 31, 2008 | 9.98% | 3.33% |
| Dec 31, 2007 | 12.04% | 3.89% |
| Dec 31, 2006 | 12.38% | 3.91% |
| Dec 31, 2005 | 13.06% | 3.25% |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 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), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Industry (Industrials)
Illinois Tool Works Inc., ROA, long-term trends, comparison to industry (industrials)
| Illinois Tool Works Inc. | Industrials | |
|---|---|---|
| Dec 31, 2021 | 16.76% | 3.40% |
| Dec 31, 2020 | 13.51% | 0.04% |
| Dec 31, 2019 | 16.73% | 2.56% |
| Dec 31, 2018 | 17.24% | 3.16% |
| Dec 31, 2017 | 10.05% | 3.59% |
| Dec 31, 2016 | 13.39% | 4.55% |
| Dec 31, 2015 | 12.07% | 3.52% |
| Dec 31, 2014 | 16.66% | 4.31% |
| Dec 31, 2013 | 8.41% | 3.91% |
| Dec 31, 2012 | 14.86% | 3.38% |
| Dec 31, 2011 | 11.52% | 3.69% |
| Dec 31, 2010 | 9.40% | 3.03% |
| Dec 31, 2009 | 5.89% | 2.24% |
| Dec 31, 2008 | 9.98% | 3.10% |
| Dec 31, 2007 | 12.04% | 3.87% |
| Dec 31, 2006 | 12.38% | 6.41% |
| Dec 31, 2005 | 13.06% | 1.42% |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 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), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).