McKesson Corp. (NYSE:MCK)

Return on Assets (ROA)

ROA exhibited fluctuations over the observed periods, starting at 3.89% in the fiscal year ending March 31, 2011. It experienced a rise to 4.24% in 2012, followed by a decline to 3.85% in 2013. There was a more noticeable drop in 2014 to 2.44%, indicating reduced efficiency in asset utilization. Subsequently, ROA showed a recovery trend, reaching 2.74% in 2015 and further increasing to 3.99% in 2016.

Financial Leverage

Financial leverage increased consistently throughout the period, moving from 4.28 in 2011 to a peak of 6.73 in 2015. This steady rise suggests an increasing reliance on debt financing. In 2016, the leverage ratio saw a slight decline to 6.34, indicating a modest reduction in leverage but maintaining a high level compared to earlier years.

Return on Equity (ROE)

ROE showed considerable variability, starting at 16.65% in 2011 and peaking at 20.54% in 2012. After a decline to 18.93% in 2013 and a further drop to 14.82% in 2014, the metric rebounded substantially to 18.45% in 2015, culminating in a significant increase to 25.3% in 2016. This pattern suggests that despite fluctuations in asset efficiency, equity returns strengthened considerably, likely influenced by increased financial leverage.

The financial data reveals several notable trends over the six-year period ending March 31, 2016. The company demonstrated varying performance across key profitability and efficiency metrics.

Net Profit Margin (%)

The net profit margin showed minor fluctuations with an initial increase from 1.07% in 2011 to a peak of 1.14% in 2012, followed by a gradual decline reaching 0.82% in 2015. Notably, 2016 saw a significant recovery to 1.18%, the highest margin in the period. This pattern suggests intermittent improvements in profitability control or cost management over the years, with a strong rebound in the final year observed.

Asset Turnover (ratio)

Asset turnover started relatively high at 3.63 in 2011, showing a small increase to 3.71 in 2012 before decreasing to 3.52 in 2013. A more pronounced decline was evident in 2014, reaching 2.66, indicating a decline in the efficiency of asset use. However, the ratio partially recovered in 2015 and 2016, ending at 3.37. This trend implies challenges in maintaining asset utilization efficiency, with some recovery efforts evident toward the end of the period.

Financial Leverage (ratio)

Financial leverage exhibited a consistent upward trend from 4.28 in 2011 to a peak of 6.73 in 2015, before slightly declining to 6.34 in 2016. This increase reflects a growing reliance on debt or other liabilities relative to equity, potentially indicating efforts to finance expansion or capital-intensive activities via leverage. The slight reduction in the final year may signal moderate deleveraging or balance sheet optimization efforts.

Return on Equity (ROE) (%)

Return on equity experienced variability but overall demonstrated strong improvement. It rose from 16.65% in 2011 to a peak of 20.54% in 2012, followed by a decrease to 14.82% in 2014. Subsequent years showed a rebound, reaching 18.45% in 2015 and significantly increasing to 25.3% in 2016. These fluctuations, combined with the upward trend, suggest enhanced profitability and value generation for shareholders over time, with the highest return achieved in the final reported year.

In summary, the company’s financial performance exhibits a pattern of fluctuating profitability metrics with a strong recovery in the final year. Asset utilization efficiency faced challenges mid-period but improved thereafter. Increasing financial leverage indicates a strategic use of debt, while ROE improvements highlight enhanced shareholder value creation despite some mid-period declines. Overall, the data points to resilience and positive momentum in profitability and returns by the end of the period.

The financial data over the six-year period reveals several notable trends regarding profitability, operational efficiency, and financial structure.

Tax Burden

The tax burden ratio fluctuated, starting at 0.70 in 2011, peaking at 0.73 in 2012, then declining to a low of 0.63 in 2014, before increasing again to 0.71 in 2016. This indicates variability in the proportion of earnings retained after tax, with a noticeable dip around 2014 and recovery thereafter.

Interest Burden

The interest burden ratio remained relatively stable, oscillating narrowly between 0.86 and 0.90 over the period. This suggests consistent management of interest expenses relative to earnings before interest and taxes.

EBIT Margin

The EBIT margin showed mild volatility, beginning at 1.72% in 2011 and peaking at 1.84% in 2016. There was a slight decline between 2013 and 2015, reaching a low of 1.49%, before recovering in the final year. This pattern reflects some fluctuations in operational profitability but an overall improvement towards the end of the period.

Asset Turnover

Asset turnover exhibited an initial rise from 3.63 in 2011 to 3.71 in 2012 followed by a decline to 2.66 in 2014. It then increased again, reaching 3.37 in 2016. The dip around 2014 indicates reduced efficiency in utilizing assets to generate revenues but the subsequent recovery shows an improvement in asset productivity.

Financial Leverage

Financial leverage increased significantly over the period, from 4.28 in 2011 to a peak of 6.73 in 2015, before slightly decreasing to 6.34 in 2016. This upward trend indicates greater reliance on debt or liabilities to finance assets, which may increase financial risk but also magnify returns.

Return on Equity (ROE)

ROE demonstrated considerable fluctuations, rising from 16.65% in 2011 to 20.54% in 2012, dipping to 14.82% in 2014, and then rising sharply to 25.3% in 2016. The spike in 2016 represents enhanced overall profitability relative to shareholders’ equity, likely driven by improved margins and effective leverage management.

In summary, the company showed a generally positive trend in profitability as evidenced by rising ROE and EBIT margin towards the end of the period, despite some mid-period declines. Operational efficiency fluctuated with a notable dip in asset turnover in 2014 but recovered thereafter. Increased financial leverage suggests a strategic shift towards more debt financing, which coincided with improved returns to equity holders, albeit with potentially heightened financial risk.

Net Profit Margin

The net profit margin demonstrates some variability over the period. It increased slightly from 1.07% in 2011 to a peak of 1.14% in 2012. Then, it experienced a gradual decline, dropping to 0.92% in 2014 and further to 0.82% in 2015. However, there was a notable recovery in 2016, when the margin rose to 1.18%, the highest level in the observed timeframe.

Asset Turnover

The asset turnover ratio exhibited a fluctuating trend. It started at 3.63 in 2011 and reached a slight increase to 3.71 in 2012. Following that, a decline occurred in 2013 and 2014, with the ratio falling to 3.52 and then significantly to 2.66, indicating less efficient use of assets during this period. Recovery was seen thereafter, with the ratio increasing to 3.32 in 2015 and slightly to 3.37 in 2016, suggesting an improvement in asset utilization towards the end of the period.

Return on Assets (ROA)

The return on assets shows a pattern that closely mirrors the trends in net profit margin and asset turnover. ROA rose from 3.89% in 2011 to 4.24% in 2012, representing enhanced profitability relative to assets. It then declined to a low of 2.44% in 2014, before a moderate increase to 2.74% in 2015 and a stronger rebound to 3.99% in 2016. This suggests a period of lower asset efficiency and profitability mid-cycle, with recovery occurring towards the end of the reviewed years.

The analyzed financial data reveals several noteworthy trends in the company's operational efficiency and profitability over the six-year period ending March 31, 2016.

Tax Burden

The tax burden ratio exhibits some fluctuation, starting at 0.70 in 2011, peaking slightly at 0.73 in 2012, dipping to a low of 0.63 in 2014, and rising again to 0.71 by 2016. This pattern indicates variability in the effective tax rate, with a generally moderate tax advantage observed in 2014 and 2015, followed by a higher tax burden in the final reported year.

Interest Burden

The interest burden ratio remains relatively stable throughout the period, consistently hovering between 0.86 and 0.90. The minor increase to 0.90 in 2016 suggests a slight improvement in operating income relative to earnings before interest and taxes, implying some stability or marginal improvement in financing costs or interest expenses.

EBIT Margin

The EBIT margin starts at 1.72% in 2011 and experiences a slight upward trend until 2013. However, it declines to 1.49% by 2015, indicating a reduction in operational profitability at its lowest point during this period. In 2016, there is a noticeable improvement to 1.84%, the highest value in the dataset, suggesting enhanced operational efficiency or better cost management in the most recent year.

Asset Turnover

Asset turnover demonstrates variability, beginning at 3.63 in 2011 and slightly increasing to 3.71 in 2012. It then decreases sharply to 2.66 in 2014, reflecting a likely reduction in sales generation relative to asset base. Although there is a partial recovery to 3.37 by 2016, the asset turnover ratio remains below its earlier peak, indicating an overall decline in asset utilization efficiency over the examined timeframe.

Return on Assets (ROA)

Return on assets follows a broadly declining trend from 3.89% in 2011 to 2.44% in 2014, consistent with the declines observed in EBIT margin and asset turnover. This suggests diminishing profitability relative to the asset base during that period. However, ROA recovers to 3.99% by 2016, the highest rate in the series, which appears to be driven by improvements in both operational margins and asset efficiency.

An analysis of the financial ratios over the six-year period reveals several notable trends in profitability and burden metrics.

Tax Burden

The tax burden ratio experienced fluctuations throughout the period, starting at 0.70 in 2011 and showing an overall slight decline reaching a low of 0.63 in 2014. Subsequently, it increased again to 0.71 by 2016. This indicates variability in the effective tax rate impacting the company’s earnings after tax.

Interest Burden

The interest burden ratio remained relatively stable, fluctuating narrowly between 0.86 and 0.90 across the years. The ratio was at its lowest in 2015 at 0.86 and highest in 2016 at 0.90, suggesting consistent management of interest expenses relative to earnings before interest and taxes.

EBIT Margin

The Earnings Before Interest and Taxes (EBIT) margin initially increased slightly from 1.72% in 2011 to a peak of 1.77% in 2012 but then declined gradually to 1.49% in 2015. However, by 2016, a recovery occurred, with the margin rising sharply to 1.84%, the highest in the observed period. This reflects some volatility but overall an improvement in operational profitability towards the end of the period.

Net Profit Margin

The net profit margin showed a similar pattern to the EBIT margin but with more pronounced dips. It increased from 1.07% in 2011 to 1.14% in 2012, followed by a decline to a low of 0.82% in 2015. In 2016, the margin rebounded to 1.18%, exceeding the initial levels. This suggests fluctuating bottom-line profitability but a positive turnaround in the final year of the period.