Stock Analysis on Net
Stock Analysis on Net

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

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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 financial data reveals several key trends and fluctuations over the six-year period analyzed.

Gross Profit and Cost of Sales
Gross profit as a percentage of revenues showed a general upward trend from 5.33% in 2011 to a peak of 6.37% in 2015, before slightly declining to 5.98% in 2016. This improvement correlates with a modest decrease in the cost of sales ratio, which fell from 94.67% in 2011 to 93.63% in 2015, then edged up again to 94.02% in 2016. The overall trend suggests enhanced efficiency in managing costs relative to revenues until 2015, followed by a minor deterioration in 2016.
Operating Expenses
Selling, distribution and administrative expenses rose steadily from -3.15% in 2011 to a high of -4.41% in 2015, then reduced to -3.81% in 2016. Research and development expenses remained relatively stable and low, fluctuating slightly around -0.2% to -0.39% of revenues, with a declining tendency from 2014 onward. Restructuring charges appeared only in 2016 at -0.11%, indicating a one-time expense. The claim and litigation charges demonstrated a declining trend from -0.19% in 2011 to nearly negligible levels by 2014 and 2015.
Operating Income and Other Income Items
Operating income as a proportion of revenues increased from 1.62% in 2011 to a peak of 1.89% in 2013, then fluctuated between 1.66% and 1.86% through 2016. Minor contributions or deductions from other income items, including interest income, equity earnings, and other net items, remained relatively stable and minimal in percentage terms throughout the period.
Income Before Taxes and Income Tax Expense
Income from continuing operations before income taxes hovered around the mid-1% range, starting at 1.46% in 2011, peaking at 1.7% in 2016, indicating modest improvement in pre-tax profitability. Income tax expense as a percentage of revenues was fairly stable, fluctuating between -0.42% and -0.54%, with no clear trend upward or downward.
Net Income and Discontinued Operations
Net income attributable to the company rose from 1.07% in 2011 to 1.14% in 2012, then declined to a low of 0.82% in 2015 before recovering to 1.18% in 2016. Notably, income from discontinued operations had a negative impact in 2014 and 2015, at -0.07% and -0.17% respectively, which coincides with the dip in net income during those years. The net loss attributable to noncontrolling interests appeared as minor negative values in 2015 and 2016, exerting a small downward effect on net income.
One-Time and Non-Recurring Items
There is evidence of one-time or unusual items affecting the results in some years, such as a gain on a business combination in 2013 (0.07%), an impairment of an equity investment in the same year (-0.16%), and restructuring charges recorded in 2016 (-0.11%). These items likely influenced the operating expenses and overall profitability metrics in their respective periods.

In summary, the company demonstrated a pattern of improving gross margin efficiency and managing operating expenses with some variability. Profitability ratios showed resilience with peaks and troughs correlated to both operational factors and one-time events. The dip in net income during the mid-period appears associated with discontinued operations and elevated operating expenses but was followed by recovery in the final year observed. Overall, the data suggests effective cost control initiatives and operational improvements, tempered by episodic charges impacting earnings consistency.