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McKesson Corp. (NYSE:MCK)

This company has been moved to the archive! The financial data has not been updated since October 27, 2016.

Common-Size Income Statement

McKesson Corp., common-size consolidated income statement

Microsoft Excel
12 months ended: Mar 31, 2016 Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 Mar 31, 2012 Mar 31, 2011
Revenues 100.00 100.00 100.00 100.00 100.00 100.00
Cost of sales -94.02 -93.63 -93.96 -94.30 -94.65 -94.67
Gross profit 5.98% 6.37% 6.04% 5.70% 5.35% 5.33%
Selling, distribution and administrative expenses -3.81 -4.41 -3.94 -3.43 -3.12 -3.15
Research and development -0.21 -0.22 -0.33 -0.39 -0.36 -0.36
Restructuring charges -0.11 0.00 0.00 0.00 0.00 0.00
Claim and litigation charges 0.00 -0.08 -0.05 -0.06 -0.12 -0.19
Gain on business combination 0.00 0.00 0.00 0.07 0.00 0.00
Operating expenses -4.12% -4.72% -4.32% -3.81% -3.60% -3.70%
Operating income 1.86% 1.66% 1.72% 1.89% 1.75% 1.62%
Interest income 0.01 0.01 0.02 0.02 0.02 0.02
Equity in earnings (loss), net 0.01 0.01 0.00 0.00 0.01 -0.01
Other, net 0.01 0.02 0.01 0.01 -0.01 0.02
Other income, net 0.03% 0.04% 0.02% 0.03% 0.02% 0.03%
Impairment of an equity investment 0.00 0.00 0.00 -0.16 0.00 0.00
Interest expense -0.18 -0.21 -0.22 -0.20 -0.20 -0.20
Income from continuing operations before income taxes 1.70% 1.48% 1.52% 1.57% 1.56% 1.46%
Income tax expense -0.48 -0.46 -0.54 -0.47 -0.42 -0.45
Income from continuing operations 1.23% 1.03% 0.98% 1.09% 1.14% 1.01%
Income (loss) from discontinued operations, net of tax -0.02 -0.17 -0.07 0.00 0.00 0.06
Net income 1.21% 0.86% 0.91% 1.09% 1.14% 1.07%
Net (income) loss attributable to noncontrolling interests -0.03 -0.04 0.00 0.00 0.00 0.00
Net income attributable to McKesson Corporation 1.18% 0.82% 0.92% 1.09% 1.14% 1.07%

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

The common-size income statement reveals a period of relative stability in overall profitability, characterized by modest fluctuations in gross margins and operating expenses between 2011 and 2016.

Gross Profitability and Cost of Sales
A gradual improvement in gross profit margins is observed from 2011 to 2015, rising from 5.33% to a peak of 6.37%. This trend was driven by a corresponding decrease in the cost of sales, which dropped from 94.67% of revenues in 2011 to 93.63% in 2015. However, this efficiency gain partially reversed in 2016, as the cost of sales increased to 94.02%, bringing the gross profit margin down to 5.98%.
Operating Expense Management
Selling, distribution, and administrative expenses exhibited an upward trend for much of the period, increasing from 3.15% in 2011 to 4.41% in 2015. This expansion in operational spending largely offset the gains achieved in gross profit. A correction occurred in 2016, where these expenses decreased to 3.81%. Research and development costs remained consistently low, showing a slight decline from 0.36% in 2011 to 0.21% in 2016.
Operating and Pre-Tax Income
Operating income remained resilient, fluctuating within a narrow band between 1.62% and 1.89%. Despite the rise in operating expenses through 2015, operating income ended the period at 1.86% in 2016, representing an improvement over the 2011 baseline. Interest expenses remained stable, averaging approximately 0.20% of revenues throughout the six-year period, indicating consistent debt servicing costs relative to revenue growth.
Net Income and Discontinued Operations
Net income attributable to the corporation showed volatility, primarily influenced by discontinued operations. While income from continuing operations remained steady around 1.0% to 1.2%, losses from discontinued operations in 2014 (-0.07%) and 2015 (-0.17%) contributed to a decline in the final net margin, which hit a low of 0.82% in 2015. A recovery is evident in 2016, with the net income attributable to the corporation rising to 1.18%.

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