Marathon Oil Corp. (NYSE:MRO)

Return on Assets (ROA)

The return on assets exhibits significant volatility over the analyzed period. It started at a notably negative value of -26% in 2017, improved to positive levels in 2018 and 2019, registering 5.14% and 2.37% respectively. However, in 2020, the ROA declined again to a negative figure of -8.08%, before rebounding to 5.57% in 2021. This pattern indicates fluctuating asset profitability, with alternating periods of gains and losses.

Financial Leverage

Financial leverage shows a consistent downward trend throughout the period. Beginning at 1.88 in 2017, the ratio decreased gradually each year, reaching 1.59 by the end of 2021. This suggests a gradual reduction in reliance on debt financing relative to equity, potentially implying a more conservative capital structure or improved equity base.

Return on Equity (ROE)

The return on equity mirrors the volatility observed in ROA but on a larger scale. It commenced with a steep negative value of -48.88% in 2017, moved into positive territory in 2018 and 2019 (with 9.04% and 3.95% respectively), before declining to -13.74% in 2020. The ratio then recovered sharply to 8.85% in 2021. This indicates considerable fluctuations in shareholder profitability, influenced likely by varying net income levels and financial leverage changes over the years.

Net Profit Margin

The net profit margin exhibited significant volatility during the period. In 2017, the margin was deeply negative at -130.87%, indicating substantial losses. This turned positive in 2018, reaching 18.57%, then declined to a reduced positive margin of 9.48% in 2019. The margin fell sharply again in 2020 to -46.85%, reflecting a return to heavy losses. In 2021, the margin recovered to 16.89%, showing a rebound in profitability. Overall, the trend suggests a highly unstable profitability pattern with large swings between losses and gains.

Asset Turnover

The asset turnover ratio, which measures efficiency in using assets to generate sales, showed moderate fluctuations. It started at 0.20 in 2017, increased to 0.28 in 2018, then decreased slightly to 0.25 in 2019. A notable decline occurred in 2020 to 0.17, followed by a strong recovery in 2021 to 0.33, the highest value in the period. This suggests varying operational efficiency, with 2021 marking an improvement in asset utilization.

Financial Leverage

Financial leverage steadily declined over the five-year span. Beginning at 1.88 in 2017, the ratio decreased annually with minor fluctuation: 1.76 in 2018, 1.67 in 2019, a slight uptick to 1.70 in 2020, and a further decline to 1.59 in 2021. This indicates a gradual reduction in the company's use of debt relative to equity, implying a cautious approach towards leveraging.

Return on Equity (ROE)

Return on equity reflected the overall profitability variability consistent with net profit margin trends. The ROE was highly negative at -48.88% in 2017, turning positive at 9.04% in 2018. It then declined to a lower positive return of 3.95% in 2019, followed by a negative return of -13.74% in 2020. In 2021, ROE recovered to 8.85%. These fluctuations highlight inconsistent value generation for shareholders across the years, with recovery signs after periods of losses.

The analysis of the provided financial ratios over the five-year period reveals varying performance and financial health indicators. There are observable fluctuations and trends that characterize the company's operational efficiency, profitability, and capital structure management.

Tax Burden

The tax burden ratio shows variability, with a value below 1.0 in 2018 and 2021, indicating effective tax management during these periods. However, an anomalously high value in 2019 (1.22) suggests an unusual tax expense relative to pre-tax earnings, whereas data for 2017 and 2020 is not available, limiting trend continuity in this area.

Interest Burden

This ratio follows a declining trend from 0.84 in 2018 to 0.58 in 2019, reflecting improved capacity to cover interest expenses from operating earnings in 2019. It then increases again to 0.80 in 2021, which may indicate a rise in interest expense or reduced operating earnings capacity. Data for 2017 and 2020 is missing, hindering a full trend analysis.

EBIT Margin

The EBIT margin indicates significant volatility, with a large negative margin in 2017 (-113.65%) and 2020 (-38.3%), signaling operating losses during these years. Positive margins in 2018 (28.92%), 2019 (13.27%), and 2021 (22.51%) suggest periods of profitability and operational improvement. This fluctuation denotes unstable operating performance across the timeframe.

Asset Turnover

This metric generally demonstrates moderate fluctuations, from a low 0.17 in 2020 to a high 0.33 in 2021, implying improved efficiency in generating sales from assets in 2021. The increasing trend from 2017 through 2021, despite a dip in 2020, suggests efforts to better utilize asset base to drive revenue.

Financial Leverage

A consistent decline in financial leverage is observed, decreasing from 1.88 in 2017 to 1.59 in 2021. This reduction indicates a gradual decrease in reliance on debt financing relative to equity, potentially lowering financial risk and interest obligations over the period.

Return on Equity (ROE)

The ROE displays a recovery trend from negative returns in 2017 (-48.88%) and 2020 (-13.74%) toward positive but modest returns in 2018 (9.04%), 2019 (3.95%), and 2021 (8.85%). This pattern generally mirrors fluctuations in operating performance and profitability.

Overall, the data reflects considerable volatility in operating results and profitability, highlighted by inconsistent EBIT margins and ROE values. Improvements in asset turnover and decreases in financial leverage suggest the company has taken steps toward operational efficiency and more conservative financing. However, the variability in tax and interest burden ratios and recurring negative operating margins in specific years imply ongoing challenges affecting sustained profitability and financial stability.

Net Profit Margin

The net profit margin experienced significant volatility over the five-year period. It started with a very negative margin of -130.87% in 2017, indicating considerable losses. The margin improved markedly to a positive 18.57% in 2018, reflecting a strong recovery. In 2019, it declined to 9.48%, still positive but reduced from the previous year. The margin then plummeted again in 2020 to -46.85%, showing a sharp reversal to substantial losses. In 2021, the margin rebounded to 16.89%, returning to profitability. Overall, the net profit margin shows a pattern of high fluctuation, with alternating years of losses and gains, suggesting underlying volatility in profitability.

Asset Turnover

The asset turnover ratio demonstrated fluctuations as well, though within a narrower range. It increased from 0.20 in 2017 to 0.28 in 2018, showing improved efficiency in generating sales from assets. The ratio declined slightly to 0.25 in 2019, followed by a more pronounced reduction to 0.17 in 2020. In 2021, asset turnover reached its highest level in the period at 0.33, indicating a strong gain in asset utilization. This pattern suggests a recovery in operational efficiency after a dip in the middle years.

Return on Assets (ROA)

ROA displayed a pattern similar to the net profit margin, reflecting the profitability relative to total assets. It began with a deeply negative -26% in 2017, improved to a positive 5.14% in 2018, then decreased to 2.37% in 2019. The ROA turned negative again in 2020 at -8.08%, indicating a loss-generating year in terms of asset efficiency. By 2021, ROA improved to 5.57%, signaling a return to profitability. The cyclical nature of the ROA values aligns with the fluctuations seen in profit margins, highlighting profitability variability in relation to asset usage.

Tax Burden

The tax burden ratio shows variability over the periods presented, with values recorded at 0.77 in 2018, increasing significantly to 1.22 in 2019, and then decreasing to 0.94 in 2021. The absence of data for 2017 and 2020 limits trend analysis for those years.

Interest Burden

The interest burden ratio exhibits a declining trend from 0.84 in 2018 to 0.58 in 2019, followed by an increase to 0.80 in 2021. Data for 2017 and 2020 are not available, restricting complete longitudinal analysis.

EBIT Margin

The EBIT margin has demonstrated considerable fluctuation across the five-year span. It was deeply negative in 2017 at -113.65%, recovered to positive levels in 2018 (28.92%) and declined thereafter to 13.27% in 2019. The margin dropped substantially into negative territory again in 2020 (-38.3%), and rebounded to 22.51% in 2021, indicating volatility in operational profitability.

Asset Turnover

Asset turnover ratios reveal an overall upward movement with some fluctuations: from 0.20 in 2017, it increased to 0.28 in 2018, slightly declined to 0.25 in 2019, fell further to 0.17 in 2020, and then rose markedly to 0.33 in 2021. This reflects variability in the efficiency of asset use in generating sales over time.

Return on Assets (ROA)

Return on Assets has mirrored the EBIT margin's volatility, showing a strongly negative return of -26% in 2017, followed by moderate positive returns in 2018 (5.14%) and 2019 (2.37%). There was a return to negative territory in 2020 with -8.08%, followed by a recovery to 5.57% in 2021. The pattern suggests fluctuating profitability relative to asset base across the periods.

The financial indicators over the reviewed periods reveal significant fluctuations in profitability and burden ratios.

Tax Burden Ratio

The tax burden ratio exhibits variability, with a notable increase from 0.77 in 2018 to 1.22 in 2019, followed by a decrease to 0.94 in 2021. The gap in data for 2017 and 2020 limits trend continuity but the available figures suggest inconsistent tax impact on profitability during the years reported.

Interest Burden Ratio

This ratio declines sharply from 0.84 in 2018 to 0.58 in 2019, indicating improved management or reduction of interest expenses relative to earnings before interest and taxes for that year. In 2021, it rises again to 0.8, implying increased interest burdens relative to EBIT compared to 2019. Missing values in 2017 and 2020 prevent a full longitudinal assessment.

EBIT Margin

The EBIT margin shows high volatility, with a deeply negative margin of -113.65% in 2017, indicating substantial operating losses. It improves drastically to a positive 28.92% in 2018, but falls back to 13.27% in 2019. The margin turns negative again in 2020 (-38.3%), suggesting severe operating challenges, before rebounding to 22.51% in 2021. This pattern suggests an unstable operating profitability with periods of significant financial stress.

Net Profit Margin

The net profit margin closely mirrors the EBIT margin trend, with a deeply negative margin (-130.87%) in 2017 and recovery to positive levels in 2018 (18.57%) and 2019 (9.48%). A sharp deterioration occurs in 2020, reaching -46.85%, followed by a recovery to 16.89% in 2021. These fluctuations highlight considerable variability in net profitability, influenced by factors beyond operating income such as interest and tax expenses.