Analysis of Geographic Areas
McKesson Corp. operates in 2 regions: United States and Foreign.
Area Asset Turnover
McKesson Corp., asset turnover by geographic area
| Mar 31, 2016 | Mar 31, 2015 | Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2012 | Mar 31, 2011 | |
|---|---|---|---|---|---|---|
| United States | 105.50 | 112.18 | 98.26 | 93.18 | 117.89 | 113.31 |
| Foreign | 41.94 | 46.94 | 15.56 | 87.69 | 115.43 | 111.06 |
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 asset turnover ratios for the United States and Foreign segments exhibit divergent performance patterns over the six-year period from 2011 to 2016. While both regions initially demonstrated similar efficiency levels, a significant disparity emerged starting in 2014.
- United States Asset Turnover
- Asset efficiency in the United States remained relatively resilient, fluctuating between a low of 93.18 in 2013 and a peak of 117.89 in 2012. Despite a notable dip in 2013, the ratio recovered to 112.18 by 2015 before settling at 105.50 in 2016, indicating a consistent ability to generate revenue relative to the assets deployed in this region.
- Foreign Asset Turnover
- The foreign segment experienced a severe contraction in asset turnover. After maintaining levels comparable to the domestic market through 2012, the ratio decreased to 87.69 in 2013 and plummeted to 15.56 in 2014. A partial recovery occurred in 2015, reaching 46.94, though it subsequently declined to 41.94 in 2016, representing a substantial long-term decrease in asset utilization efficiency.
- Comparative Regional Divergence
- A clear divergence is observed beginning in 2014, where the United States maintained a stable turnover ratio while the foreign segment underwent a drastic reduction. This indicates a significant shift in the operational efficiency or asset structure of foreign operations relative to the domestic market, as the domestic segment continued to operate at a much higher capacity of asset productivity.
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Area Asset Turnover: United States
McKesson Corp.; United States; area asset turnover calculation
| Mar 31, 2016 | Mar 31, 2015 | Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2012 | Mar 31, 2011 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | 158,255) | 142,810) | 122,426) | 112,283) | 112,230) | 102,089) |
| Property, plant and equipment, net | 1,500) | 1,273) | 1,246) | 1,205) | 952) | 901) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 105.50 | 112.18 | 98.26 | 93.18 | 117.89 | 113.31 |
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).
1 2016 Calculation
Area asset turnover = Revenues ÷ Property, plant and equipment, net
= 158,255 ÷ 1,500 = 105.50
Between fiscal years 2011 and 2016, the United States operations demonstrated substantial growth in total revenues alongside a steady expansion of the fixed asset base. While revenue increased consistently throughout the period, the efficiency of asset utilization, as measured by the area asset turnover ratio, experienced significant volatility.
- Revenue Growth Trends
- Revenues exhibited a continuous upward trajectory, rising from 102,089 million US dollars in 2011 to 158,255 million US dollars by 2016. This represents a total increase of approximately 55% over the six-year period, with the most pronounced acceleration occurring between 2014 and 2016.
- Fixed Asset Expansion
- Net property, plant, and equipment increased from 901 million US dollars in 2011 to 1,500 million US dollars in 2016. A notable escalation in capital investment occurred between 2012 and 2013, where assets grew from 952 million to 1,205 million US dollars, indicating a period of significant infrastructure expansion.
- Area Asset Turnover Analysis
- The area asset turnover ratio fluctuated, starting at 113.31 in 2011 and peaking at 117.89 in 2012. A sharp decline to 93.18 was recorded in 2013, coinciding with the aforementioned increase in fixed assets, which suggests that the immediate revenue gains did not scale proportionally with the capital expenditure at that time. Efficiency recovered in subsequent years, reaching 112.18 by 2015, before moderating to 105.50 in 2016.
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Area Asset Turnover: Foreign
McKesson Corp.; Foreign; area asset turnover calculation
| Mar 31, 2016 | Mar 31, 2015 | Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2012 | Mar 31, 2011 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | 32,629) | 36,235) | 15,183) | 10,172) | 10,504) | 9,995) |
| Property, plant and equipment, net | 778) | 772) | 976) | 116) | 91) | 90) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 41.94 | 46.94 | 15.56 | 87.69 | 115.43 | 111.06 |
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).
1 2016 Calculation
Area asset turnover = Revenues ÷ Property, plant and equipment, net
= 32,629 ÷ 778 = 41.94
Foreign operations exhibited a period of significant scaling and capital restructuring between March 2011 and March 2016. This period is characterized by a substantial increase in both top-line revenue and the underlying asset base, resulting in a volatile asset turnover ratio.
- Revenue Performance
- Revenues remained relatively stable between 2011 and 2013, fluctuating around 10 billion US dollars. A sharp upward trajectory began in 2014, with revenue climbing to 15.18 billion US dollars, followed by a peak of 36.24 billion US dollars in 2015. A slight contraction occurred by March 2016, with revenues ending at 32.63 billion US dollars.
- Property, Plant and Equipment Trends
- The net asset base remained minimal from 2011 to 2013, staying below 120 million US dollars. A drastic expansion occurred in 2014, where property, plant, and equipment surged to 976 million US dollars, representing a significant capital investment. This figure subsequently stabilized between 772 million and 778 million US dollars during the 2015 and 2016 fiscal years.
- Area Asset Turnover Analysis
- The turnover ratio experienced extreme volatility as a result of diverging growth rates between assets and revenues. High efficiency was observed from 2011 to 2012, with ratios exceeding 111. This efficiency plummeted to 15.56 in 2014, directly coinciding with the massive increase in the asset base. A partial recovery followed in 2015 as revenue growth significantly outpaced the asset base, bringing the ratio up to 46.94, before it settled at 41.94 in 2016.
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Revenues
McKesson Corp., revenues by geographic area
US$ in millions
| Mar 31, 2016 | Mar 31, 2015 | Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2012 | Mar 31, 2011 | |
|---|---|---|---|---|---|---|
| United States | 158,255) | 142,810) | 122,426) | 112,283) | 112,230) | 102,089) |
| Foreign | 32,629) | 36,235) | 15,183) | 10,172) | 10,504) | 9,995) |
| Total | 190,884) | 179,045) | 137,609) | 122,455) | 122,734) | 112,084) |
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).
Total revenues exhibited a strong upward trajectory over the six-year period ending March 31, 2016, increasing from $112.1 billion to $190.9 billion. This growth was characterized by consistent expansion within the domestic market and a period of significant volatility and rapid scale-up in international operations.
- United States Revenue Trends
- Domestic revenues showed a steady and uninterrupted increase from $102.1 billion in 2011 to $158.3 billion in 2016. The growth rate accelerated notably between 2014 and 2015, with an increase of approximately $20.4 billion, marking the largest single-year domestic gain in the observed period.
- Foreign Revenue Dynamics
- International revenues remained relatively stagnant between 2011 and 2013, fluctuating around the $10 billion mark. A sharp expansion phase began in 2014, with revenues climbing to $15.2 billion, followed by a surge to $36.2 billion in 2015. This peak was followed by a moderate decline to $32.6 billion in 2016, suggesting a period of rapid acquisition or market entry followed by a correction or currency impact.
- Geographic Revenue Concentration
- The proportional contribution of foreign markets to total revenue shifted significantly. In 2011, foreign operations accounted for approximately 8.9% of total revenue. This share peaked at 20.2% in 2015 before settling at 17.1% in 2016. Despite the increase in international scale, the United States remained the primary driver of total revenue throughout the period.
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Property, plant and equipment, net
McKesson Corp., property, plant and equipment, net by geographic area
US$ in millions
| Mar 31, 2016 | Mar 31, 2015 | Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2012 | Mar 31, 2011 | |
|---|---|---|---|---|---|---|
| United States | 1,500) | 1,273) | 1,246) | 1,205) | 952) | 901) |
| Foreign | 778) | 772) | 976) | 116) | 91) | 90) |
| Total | 2,278) | 2,045) | 2,222) | 1,321) | 1,043) | 991) |
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).
Between March 31, 2011, and March 31, 2016, net property, plant, and equipment experienced a significant overall increase, growing from 991 million US dollars to 2.278 billion US dollars. This growth was driven by steady expansion within the United States and a substantial, though volatile, increase in foreign asset holdings.
- Domestic Asset Growth
- United States assets exhibited a consistent upward trajectory throughout the period. From 2011 to 2016, the valuation rose from 901 million US dollars to 1.5 billion US dollars, representing a steady expansion of the domestic infrastructure.
- Foreign Asset Volatility
- Foreign assets remained relatively stagnant between 2011 and 2013, fluctuating between 90 million and 116 million US dollars. However, a sharp increase occurred in 2014, with assets jumping to 976 million US dollars. Following this peak, foreign assets declined to 772 million US dollars in 2015 before stabilizing at 778 million US dollars in 2016.
- Geographic Asset Distribution
- The composition of total net property, plant, and equipment shifted significantly. In 2011, foreign assets accounted for approximately 9% of the total. By 2016, this proportion increased to approximately 34%, indicating a strategic shift toward a more globally distributed asset base, despite the fluctuations observed in the latter years.
- Total Asset Trends
- Total net property, plant, and equipment grew by approximately 130% over the five-year period. The most pronounced period of growth occurred between 2013 and 2014, where total assets increased from 1.321 billion US dollars to 2.222 billion US dollars, primarily due to the expansion of foreign holdings.
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