Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Motorola Solutions Inc., profitability ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The profitability profile demonstrates a general upward trajectory in bottom-line efficiency and asset utilization from 2019 through 2023, characterized by expanding net margins and steadily improving returns on assets.
- Margin Analysis
- Gross profit margins remained relatively stable over the five-year period, fluctuating within a narrow range between 46.41% and 49.84%. A temporary decline observed in 2022 was corrected by 2023, returning to 49.81%. Operating profit margins experienced more volatility, reaching a low of 18.23% in 2022 before surging to a period high of 22.99% in 2023. Most notably, the net profit margin exhibited a consistent and strong expansion, rising from 11.01% in 2019 to 17.13% in 2023, signaling enhanced overall operational efficiency and profit conversion.
- Return on Investment Metrics
- The return on assets (ROA) shows a linear and uninterrupted growth pattern, increasing annually from 8.16% in 2019 to 12.81% in 2023, reflecting a progressive improvement in how effectively assets are utilized to generate earnings. Return on equity (ROE) figures are characterized by extreme volatility and exceptionally high values in the latter years, peaking at 1,175.00% in 2022 before declining to 236.05% in 2023. These results suggest a significantly leveraged capital structure or a substantial reduction in shareholders' equity relative to net income during this timeframe.
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Gross Profit Margin
Motorola Solutions Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross margin | 4,970) | 4,229) | 4,040) | 3,608) | 3,931) | |
| Net sales | 9,978) | 9,112) | 8,171) | 7,414) | 7,887) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 49.81% | 46.41% | 49.44% | 48.66% | 49.84% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Apple Inc. | 44.13% | 43.31% | 41.78% | 38.23% | — | |
| Arista Networks Inc. | 61.95% | 61.07% | 63.80% | — | — | |
| Cisco Systems Inc. | 62.73% | 62.55% | 64.02% | — | — | |
| Dell Technologies Inc. | 22.18% | 21.63% | 31.22% | — | — | |
| Lumentum Holdings Inc. | 32.20% | 46.05% | 44.93% | — | — | |
| Super Micro Computer Inc. | 18.01% | 15.40% | 15.03% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Gross profit margin = 100 × Gross margin ÷ Net sales
= 100 × 4,970 ÷ 9,978 = 49.81%
2 Click competitor name to see calculations.
Net sales exhibited a resilient growth pattern over the five-year period, recovering from a decline in 2020 to reach nearly $10 billion by 2023. This expansion in top-line revenue was accompanied by a corresponding increase in absolute gross margin, although the efficiency of this conversion fluctuated over the analysis period.
- Revenue Trajectory
- Net sales experienced a contraction between 2019 and 2020, decreasing from $7,887 million to $7,414 million. Following this dip, a consistent upward trend was established, with annual growth leading to a peak of $9,978 million in 2023, representing a total growth of approximately 26.5% relative to 2019 levels.
- Gross Profit Performance
- The absolute gross margin closely mirrored the movement of net sales, falling to $3,608 million in 2020 before climbing steadily to $4,970 million by 2023. The most significant increase occurred between 2022 and 2023, where the gross margin grew by $741 million.
- Gross Profit Margin Analysis
- The gross profit margin percentage demonstrated a level of stability, remaining within a range of 46.41% to 49.84%. A notable period of margin compression is observed in 2022, where the margin fell to 46.41% despite an increase in net sales. This divergence indicates that the cost of goods sold grew at a faster rate than revenue during that specific fiscal year.
- Recovery and Normalization
- A strong recovery in profitability occurred in 2023, with the gross profit margin rising to 49.81%. This figure nearly matches the 2019 baseline of 49.84%, suggesting a successful normalization of cost structures or a strategic shift toward higher-margin offerings.
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Operating Profit Margin
Motorola Solutions Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating earnings | 2,294) | 1,661) | 1,667) | 1,383) | 1,581) | |
| Net sales | 9,978) | 9,112) | 8,171) | 7,414) | 7,887) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 22.99% | 18.23% | 20.40% | 18.65% | 20.05% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Apple Inc. | 29.82% | 30.29% | 29.78% | 24.15% | — | |
| Arista Networks Inc. | 38.52% | 34.86% | 31.37% | — | — | |
| Cisco Systems Inc. | 26.37% | 27.09% | 25.76% | — | — | |
| Dell Technologies Inc. | 5.64% | 4.60% | 5.46% | — | — | |
| Lumentum Holdings Inc. | -6.55% | 17.71% | 30.24% | — | — | |
| Super Micro Computer Inc. | 10.68% | 6.45% | 3.48% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Technology Hardware & Equipment | 24.76% | 25.11% | 24.80% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Information Technology | 24.34% | 26.23% | 26.58% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Operating profit margin = 100 × Operating earnings ÷ Net sales
= 100 × 2,294 ÷ 9,978 = 22.99%
2 Click competitor name to see calculations.
The operating profit margin demonstrates a period of volatility between 2019 and 2022, followed by a significant expansion in 2023, reflecting shifting efficiencies in the conversion of net sales into operating income.
- Revenue and Operating Earnings Correlation
- Net sales exhibited an overall upward trajectory after a brief contraction in 2020, growing from $7,414 million in 2020 to $9,978 million by 2023. While operating earnings generally followed this growth, the progression was non-linear; earnings remained nearly flat between 2021 and 2022 ($1,667 million and $1,661 million, respectively) before experiencing a sharp increase to $2,294 million in 2023.
- Operating Profit Margin Fluctuations
- The operating profit margin fluctuated within a range of 18.23% to 22.99%. A notable divergence is observed in 2022, where the margin declined to its period low of 18.23% despite a year-over-year increase in net sales of approximately 11.6%. This indicates that operating expenses grew at a rate exceeding revenue growth during that fiscal year.
- Operational Efficiency Peak
- A substantial improvement in operational efficiency is evident in 2023, as the operating profit margin reached a peak of 22.99%. This expansion was driven by operating earnings growing at a significantly faster rate than net sales, suggesting successful cost management or a shift toward higher-margin revenue streams.
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Net Profit Margin
Motorola Solutions Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to Motorola Solutions, Inc. | 1,709) | 1,363) | 1,245) | 949) | 868) | |
| Net sales | 9,978) | 9,112) | 8,171) | 7,414) | 7,887) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 17.13% | 14.96% | 15.24% | 12.80% | 11.01% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Apple Inc. | 25.31% | 25.31% | 25.88% | 20.91% | — | |
| Arista Networks Inc. | 35.62% | 30.87% | 28.52% | — | — | |
| Cisco Systems Inc. | 22.13% | 22.91% | 21.26% | — | — | |
| Dell Technologies Inc. | 2.39% | 5.50% | 3.45% | — | — | |
| Lumentum Holdings Inc. | -7.45% | 11.61% | 22.80% | — | — | |
| Super Micro Computer Inc. | 8.98% | 5.49% | 3.14% | — | — | |
| Net Profit Margin, Sector | ||||||
| Technology Hardware & Equipment | 20.57% | 21.31% | 21.21% | — | — | |
| Net Profit Margin, Industry | ||||||
| Information Technology | 20.24% | 22.27% | 23.48% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Net profit margin = 100 × Net earnings attributable to Motorola Solutions, Inc. ÷ Net sales
= 100 × 1,709 ÷ 9,978 = 17.13%
2 Click competitor name to see calculations.
Between December 31, 2019, and December 31, 2023, a consistent strengthening of profitability is observed. Despite a brief contraction in revenue during 2020, the company maintained a steady upward trajectory in net earnings, resulting in a significant expansion of the overall net profit margin over the five-year period.
- Net Sales Performance
- Revenue demonstrated a general growth pattern, increasing from 7,887 million US dollars in 2019 to 9,978 million US dollars in 2023. A temporary decline was noted in 2020, where sales fell to 7,414 million US dollars, before entering a period of sustained recovery and growth from 2021 through 2023.
- Net Earnings Growth
- Net earnings attributable to the company exhibited uninterrupted year-over-year growth throughout the analyzed period. Earnings rose from 868 million US dollars in 2019 to 1,709 million US dollars in 2023, representing a nearly twofold increase in absolute profitability.
- Net Profit Margin Analysis
- The net profit margin expanded from 11.01% in 2019 to 17.13% by the end of 2023. This indicates an improvement in operational efficiency and cost management, as earnings grew at a faster rate than sales. While a marginal contraction occurred in 2022, where the margin dipped to 14.96% from 15.24% in 2021, the trend recovered sharply in 2023 to reach its five-year peak.
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Return on Equity (ROE)
Motorola Solutions Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to Motorola Solutions, Inc. | 1,709) | 1,363) | 1,245) | 949) | 868) | |
| Total Motorola Solutions, Inc. stockholders’ equity (deficit) | 724) | 116) | (40) | (558) | (700) | |
| Profitability Ratio | ||||||
| ROE1 | 236.05% | 1,175.00% | — | — | — | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Apple Inc. | 156.08% | 196.96% | 150.07% | 87.87% | — | |
| Arista Networks Inc. | 28.91% | 27.68% | 21.13% | — | — | |
| Cisco Systems Inc. | 28.44% | 29.70% | 25.66% | — | — | |
| Dell Technologies Inc. | — | — | 131.10% | — | — | |
| Lumentum Holdings Inc. | -9.71% | 10.61% | 20.14% | — | — | |
| Super Micro Computer Inc. | 32.45% | 20.00% | 10.20% | — | — | |
| ROE, Sector | ||||||
| Technology Hardware & Equipment | 100.63% | 122.76% | 96.47% | — | — | |
| ROE, Industry | ||||||
| Information Technology | 31.26% | 38.03% | 41.64% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROE = 100 × Net earnings attributable to Motorola Solutions, Inc. ÷ Total Motorola Solutions, Inc. stockholders’ equity (deficit)
= 100 × 1,709 ÷ 724 = 236.05%
2 Click competitor name to see calculations.
A consistent upward trajectory in net earnings is observed over the five-year period from 2019 to 2023. Net earnings attributable to the company grew from 868 million USD in 2019 to 1,709 million USD in 2023, representing a sustained increase in bottom-line profitability.
- Equity Position Evolution
- The company transitioned from a significant stockholders' equity deficit to a positive equity position. The deficit decreased from 700 million USD in 2019 to 40 million USD in 2021, before turning positive in 2022 at 116 million USD and further increasing to 724 million USD by the end of 2023.
- Return on Equity (ROE) Dynamics
- Return on equity figures became calculable and positive only after the equity deficit was eliminated. In 2022, an exceptionally high ROE of 1,175.00% was recorded, which is attributed to the mathematical effect of a small positive equity base relative to substantial net earnings. By 2023, the ROE moderated to 236.05%.
- Relationship Between Earnings and Equity
- The decline in ROE from 2022 to 2023, despite an increase in net earnings, is driven by the rapid expansion of the equity base. As stockholders' equity increased from 116 million USD to 724 million USD, the denominator of the ROE calculation grew more significantly than the numerator, leading to a normalization of the ratio.
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Return on Assets (ROA)
Motorola Solutions Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to Motorola Solutions, Inc. | 1,709) | 1,363) | 1,245) | 949) | 868) | |
| Total assets | 13,336) | 12,814) | 12,189) | 10,876) | 10,642) | |
| Profitability Ratio | ||||||
| ROA1 | 12.81% | 10.64% | 10.21% | 8.73% | 8.16% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Apple Inc. | 27.51% | 28.29% | 26.97% | 17.73% | — | |
| Arista Networks Inc. | 20.98% | 19.96% | 14.66% | — | — | |
| Cisco Systems Inc. | 12.38% | 12.57% | 10.86% | — | — | |
| Dell Technologies Inc. | 2.73% | 6.00% | 2.63% | — | — | |
| Lumentum Holdings Inc. | -2.84% | 4.78% | 11.19% | — | — | |
| Super Micro Computer Inc. | 17.42% | 8.90% | 4.99% | — | — | |
| ROA, Sector | ||||||
| Technology Hardware & Equipment | 20.39% | 21.50% | 18.83% | — | — | |
| ROA, Industry | ||||||
| Information Technology | 12.34% | 14.33% | 14.52% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROA = 100 × Net earnings attributable to Motorola Solutions, Inc. ÷ Total assets
= 100 × 1,709 ÷ 13,336 = 12.81%
2 Click competitor name to see calculations.
A consistent upward trajectory is observed in the company's profitability and asset efficiency from 2019 to 2023. The Return on Assets (ROA) has expanded steadily each year, reflecting an improved ability to convert invested capital into net income.
- Net Earnings Growth
- Net earnings attributable to the company exhibited strong and uninterrupted growth, rising from US$ 868 million in 2019 to US$ 1,709 million in 2023. This represents a substantial increase in absolute profitability over the five-year period.
- Asset Expansion
- Total assets grew at a moderate and steady pace, increasing from US$ 10,642 million in 2019 to US$ 13,336 million in 2023. The gradual increase in the asset base suggests a controlled expansion of operational resources.
- Return on Assets (ROA) Analysis
- The ROA increased progressively from 8.16% in 2019 to 12.81% in 2023. This trend indicates that net earnings grew at a significantly faster rate than the total asset base. The acceleration in ROA suggests enhanced operational efficiency and a higher capacity to generate profit per unit of asset employed.
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