McKesson Corp. (NYSE:MCK)

Return on Assets (ROA)

The Return on Assets shows a fluctuating trend over the periods analyzed. Starting from around 3.89% at the end of March 2011, ROA generally increased to peak at 4.86% in December 2011, indicating improved efficiency in asset utilization during that timeframe. Following this, there was a gradual decline reaching a low of 2.34% in September 2014. After this trough, ROA began to recover, rising to 3.99% by June 2015 before experiencing minor fluctuations and settling around 3.28% by the end of the series in September 2016. The fluctuations suggest variability in asset performance and operational efficiency across quarters.

Financial Leverage

Financial Leverage showed a general upward trend throughout the period. It began near 3.98 in June 2010, fluctuated moderately in the earlier years but showed a significant increase starting in early 2014, peaking near 6.73 in March 2015. Following this peak, leverage remained relatively elevated, stabilizing around 6.17-6.34 in the final quarters. This rising leverage pattern implies increased use of debt or other liabilities relative to equity, which might indicate a strategic shift in capital structure or increased risk exposure during these periods.

Return on Equity (ROE)

The Return on Equity exhibited a largely upward trajectory with some volatility. Starting at approximately 16.65% in March 2011, the ROE increased to over 20% by the end of 2011 and remained above 20% through most of 2012. Thereafter, a decline phase emerged, bringing ROE down to around 13.83% in September 2014. From this point, ROE rebounded sharply, reaching a peak of 25.3% by June 2016 before falling to 20.26% by September 2016. This pattern reflects periods of strong profitability relative to shareholder equity interspersed with phases of reduced profitability, which may be influenced by operational performance or changes in financial leverage.

Net Profit Margin

The net profit margin displays variability across the analyzed periods, initially absent in earlier quarters but emerging around March 2011 at approximately 1.07%. It experiences a gradual increase, reaching a peak near 1.3% by December 2011 and March 2012. Subsequently, there is a downward trend with some fluctuations, hitting a low around 0.82% in June 2014 and March 2015. The margin then recovers moderately, peaking again at approximately 1.18% in March 2016, before declining slightly to 0.99% by September 2016. Overall, the margin reflects volatility with periods of both growth and contraction.

Asset Turnover

Asset turnover started to be reported beginning March 2011, hovering around the 3.6 to 3.9 range until early 2013. After a slight decline to near 3.5 in 2013, there is a marked decrease to approximately 2.66 by March 2014. From this low point, the ratio shows recovery and stabilizes between 3.27 and 3.43 from late 2014 through mid-2016. This indicates a dip in efficiency during 2013-2014, with improvement and stabilization thereafter.

Financial Leverage

Financial leverage ratios are available from June 2010 onwards. Initially around 3.98, the leverage ratio fluctuates mildly before increasing substantially beginning in early 2014, peaking around 6.73 in March 2015. Following this spike, leverage remains elevated though slightly decreases to approximately 6.17 by September 2016. The data indicate a strategic increase in leverage during the 2014-2016 period, suggesting enhanced use of debt or other liabilities in the capital structure.

Return on Equity (ROE)

ROE data appear starting March 2011 near 16.65% and rise to exceed 20% by mid-2012, maintaining a generally high level through 2013. A downward trend is evident in 2013-2014, falling to around 13.83%-14.82%. From this point, a significant recovery is seen, with ROE surging to a peak of 25.3% by June 2016 before declining to 20.26% by September 2016. This pattern reflects fluctuations in profitability and efficiency in generating shareholder returns, with a notable resurgence post-2014.

The analysis of the quarterly financial ratios reveals several notable trends over the periods considered.

Tax Burden

The tax burden ratio begins around 0.7 in mid-2010, experiencing minor fluctuations throughout the subsequent years. It dips to a low of approximately 0.6 around early 2014 before rising again to approximately 0.71 by mid-2016. This pattern suggests some variability in tax efficiency, with a general tendency to revert to previous levels.

Interest Burden

The interest burden displays a generally stable pattern, starting near 0.88 in mid-2010 and gradually increasing to about 0.9 by late 2012. After some minor fluctuations between 0.85 and 0.9, it maintains around 0.89 by late 2016. This stability indicates consistent management of interest expenses relative to earnings before interest and taxes.

EBIT Margin

EBIT margins show moderate volatility. Beginning around 1.7% in mid-2010, the margin generally increased to nearly 1.96% by late 2011 and early 2012. However, there was a decline thereafter, reaching around 1.53% by late 2014. The margin recovered somewhat, peaking near 1.84% in mid-2015 before falling to roughly 1.59% by late 2016. These fluctuations may reflect changes in operating efficiency or cost structures over the periods.

Asset Turnover

Asset turnover ratios were relatively high initially, near 3.7 in 2010-2011, with a noticeable decline around early 2014 to about 2.66, indicating less efficient use of assets during that period. Recovery is observed towards mid-2016 with ratios stabilizing near 3.3. The dip and recovery suggest operational adjustments or asset base changes affecting turnover rates.

Financial Leverage

Financial leverage increased progressively, starting just below 4.0 in mid-2010 and rising significantly to over 6.0 by mid-2014. It remains elevated, fluctuating around 6.2 to 6.3 through to late 2016. The rising leverage indicates greater use of debt financing, which could heighten financial risk but potentially support higher returns on equity.

Return on Equity (ROE)

ROE exhibited growth from approximately 16.7% in mid-2010 to a peak exceeding 20% by early 2012. After a decline to around 14% by early 2014, a strong rebound is seen with ROE surpassing 25% by mid-2015, followed by a slight decrease down to about 20% by late 2016. The ROE movements align partially with changes in financial leverage and operating efficiency, indicating the impact of both operational and financial strategies on shareholder returns.

In summary, the data reflects a company managing its tax and interest burdens with relative stability, while facing periodic changes in operating profitability and asset efficiency. The marked increase in financial leverage corresponds with enhanced returns on equity, albeit with increased financial risk. Overall, the financial ratios suggest progressive strategic shifts influencing profitability and risk profile over the analyzed periods.

The analysis of the quarterly financial data reveals distinct patterns and variations in the key performance indicators over the given periods.

Net Profit Margin

The net profit margin exhibits an upward trend from the initial non-reported quarters to a peak around December 2012 and March 2013, reaching approximately 1.3%. Following this peak, there is a noticeable decline through late 2013 and most of 2014, dipping to a low of around 0.82% to 0.83%. The margin then partially recovers, showing improvement in 2015 and early 2016, reaching up to 1.18% in March 2016 before a slight decline towards September 2016. This suggests some volatility in profitability but an overall moderate recovery in the later quarters.

Asset Turnover

Asset turnover, indicating efficiency in using assets to generate sales, maintains a relatively stable trend with minor fluctuations. The ratio peaks at approximately 3.89 in September 2012 but generally oscillates between 3.3 and 3.7 for most periods. A notable drop occurs in March and June 2014, descending to around 2.66, suggesting reduced efficiency in asset utilization during this interval. However, asset turnover gradually recovers through 2014 to early 2016, stabilizing again near previous levels. This pattern points to a temporary dip in operational efficiency followed by a gradual improvement.

Return on Assets (ROA)

ROA follows a pattern somewhat consistent with the net profit margin. It rises from earlier quarters, achieving a high of approximately 4.86% at the end of 2012, then declines through 2013 and significantly in 2014, falling to about 2.34%. Unlike asset turnover, the decline here is more pronounced, indicating decreased overall profitability relative to assets. Subsequently, there is a recovery phase starting late 2014 through mid-2016, with ROA increasing to near 4% before a slight pullback. This suggests that despite earlier challenges, asset returns improved moderately over the last observed periods.

Overall, the data illustrates that profitability and asset efficiency experienced a period of weakening around 2013 to 2014, followed by a recovery phase extending into 2016. The net profit margin and ROA show correlated trends with peaks and troughs occurring in similar quarters, while asset turnover demonstrates a more stable, though slightly volatile, pattern. These fluctuations may signify operational and market challenges in the mid-term, with gradual adjustments and improvements thereafter.

The analysis of the quarterly financial data reveals distinct trends in the key profitability and efficiency ratios over the observed periods.

Tax Burden Ratio

The tax burden ratio demonstrates a general decline from an initial level around 0.7 to a low near 0.6 during 2013-2014, indicating a decreasing proportion of earnings lost to taxes in that timeframe. Subsequently, the ratio recovers and stabilizes between 0.64 and 0.71 towards 2016, reflecting a moderate tax impact on profitability.

Interest Burden Ratio

This ratio remains relatively stable and consistently high throughout the periods, fluctuating modestly between 0.85 and 0.91. The stability suggests that interest expenses have been effectively managed and have not significantly eroded earnings before taxes during this time.

EBIT Margin (%)

The EBIT margin exhibited a slight downward trend from around 1.75% in early 2011 to lows near 1.49% in mid-2015, evidencing some pressure on operating profitability. Thereafter, a moderate recovery is observed, with margins rising back toward 1.79% before dipping somewhat again by late 2016. This pattern indicates some cyclical or operational challenges impacting operating efficiency intermittently.

Asset Turnover Ratio

Asset turnover initially presents high values above 3.6 but undergoes a significant decline to approximately 2.66 by early 2014, signaling reduced efficiency in utilizing assets to generate sales during that period. Following this trough, the ratio gradually improves, reaching levels above 3.3 again by 2016, suggesting a recovery in asset utilization efficiency.

Return on Assets (ROA) (%)

ROA aligns closely with trends in EBIT margin and asset turnover, starting near 3.89% and rising to a peak of 4.86% around late 2011. A subsequent sharp decline occurs, with ROA bottoming out around 2.34% during 2014, correlating to the reduction in asset turnover and EBIT margin. Recovery follows, with ROA increasing to nearly 3.99% by mid-2016, but the later values show some volatility and a slight decline towards the end of the dataset.

Overall, the data indicates a period of initial strength in profitability and asset efficiency, followed by a notable slump around 2013 to 2014, and a steady recovery phase thereafter. The tax and interest burdens have been relatively controlled, with no extreme fluctuations. The interrelated movement of EBIT margin, asset turnover, and ROA suggest operational and asset management challenges impacting profitability during the middle years, with corrective measures possibly enhancing efficiency and returns in subsequent periods.

The analyzed ratios indicate various trends in profitability and financial efficiency over the specified periods.

Tax Burden

The tax burden ratio generally fluctuated between 0.6 and 0.74, showing some volatility. It started near 0.7 in 2011, peaked at 0.74 around mid-2012, then experienced a decline reaching a low of 0.6 by the first quarter of 2014. After this dip, the ratio saw moderate recovery and fluctuated near 0.7 from 2015 onwards. This pattern suggests variable tax expense impacts on earnings, with periods of reduced effective tax rates contributing to higher net profitability.

Interest Burden

The interest burden ratio remained relatively stable and high, varying narrowly between 0.85 and 0.91. This stability implies consistent interest expense relative to earnings before interest and taxes, with no significant deterioration or strengthening in interest-related costs over time. A slight upward trend was observed towards the end of the period, indicating potentially improved interest cost management or lower relative debt expenses.

EBIT Margin

EBIT margin, representing operating profitability, showed fluctuations within a relatively narrow range from approximately 1.49% to 1.96%. It peaked in late 2011 and early 2012 around 1.96%, then declined to around 1.53% to 1.57% in late 2013 and early 2014. A gradual recovery occurred thereafter, reaching 1.84% in mid-2016 before a slight dip at the end of the period. These variations indicate modest changes in operating efficiency or cost structure impacting earnings before interest and tax.

Net Profit Margin

The net profit margin showed more pronounced fluctuations, ranging roughly from 0.82% up to 1.3%. The margin rose steadily during 2011 into early 2012, reaching a peak of 1.3%, then declined into a trough around 0.82% in late 2013 and early 2014. Following this period, margins gradually increased again, achieving a high of 1.18% in mid-2016 before declining slightly towards the end of the analysis. The changes indicate varying influences of tax, interest, and operating expenses on the ultimate profitability, reflecting shifts in cost control and possibly market conditions.