Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Return on Assets (ROA) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Profitability Ratios (Summary)
Cintas Corp., profitability ratios
Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).
- Gross Profit Margin
- The gross profit margin demonstrated a consistent upward trend over the six-year period, increasing from 45.39% in 2019 to 48.83% in 2024. This indicates an improvement in the company's efficiency in managing production costs relative to its revenue, reflecting positively on core operational profitability.
- Operating Profit Margin
- The operating profit margin exhibited a notable increase, rising from 16.45% in 2019 to 21.56% in 2024. The margin showed a steady climb each year with a more pronounced growth starting in 2021. This suggests enhanced operational effectiveness and better control of operating expenses over the reviewed period.
- Net Profit Margin
- The net profit margin fluctuated slightly but overall showed an upward movement, beginning at 12.84% in 2019, dipping marginally to 12.36% in 2020, then increasing to 16.38% by 2024. This indicates improved profitability after all expenses, reflecting the company's ability to retain more income from its revenues over time despite some short-term variations.
- Return on Equity (ROE)
- ROE experienced some variation but generally improved, increasing from 29.47% in 2019 to a peak of 37.35% in 2022, before slightly receding to 36.41% in 2024. The figures suggest strong returns generated on shareholders' equity, with a peak indicating a period of particularly high efficiency in using equity to generate profits.
- Return on Assets (ROA)
- ROA showed a steady upward trajectory from 11.9% in 2019 to 17.14% in 2024, reflecting growing effectiveness at utilizing assets to produce net income. This improvement highlights better asset management and increased profitability relative to total asset investment.
Return on Sales
Return on Investment
Gross Profit Margin
Cintas Corp., gross profit margin calculation
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Gross margin | |||||||
| Revenue | |||||||
| Profitability Ratio | |||||||
| Gross profit margin1 | |||||||
Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).
1 2024 Calculation
Gross profit margin = 100 × Gross margin ÷ Revenue
= 100 × ÷ =
- Gross Margin
- The gross margin has shown a consistent upward trend over the six-year period. Starting at approximately 3,128,588 thousand US dollars in May 2019, it increased each year, reaching 4,686,416 thousand US dollars by May 2024. This represents a substantial growth over the analyzed period, indicating improved absolute profitability at the gross profit level.
- Revenue
- Revenue has also followed a positive growth trajectory from about 6,892,303 thousand US dollars in May 2019 to 9,596,615 thousand US dollars in May 2024. This steady increase demonstrates consistent expansion in the company's sales volume or pricing, contributing to the higher gross margin in absolute terms.
- Gross Profit Margin
- The gross profit margin percentage reveals a gradual improvement in profitability on revenue. It increased from 45.39% in May 2019 to 48.83% in May 2024, with minor fluctuations along the way. The margin peaked in May 2024, indicating enhanced efficiency in managing cost of goods sold relative to revenue or an improved sales mix favoring higher-margin products or services.
- Overall Insights
- The data reflects a positive financial performance trend, characterized by increasing revenues and gross margins. The rising gross profit margin percentage suggests improved cost control or pricing strategies enhancing profitability. The continuous growth in both absolute and relative earnings performance signals operational efficiency and favorable market conditions over the period reviewed.
Operating Profit Margin
Cintas Corp., operating profit margin calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).
1 2024 Calculation
Operating profit margin = 100 × Operating income ÷ Revenue
= 100 × ÷ =
- Revenue Trend
- Revenue has shown a consistent upward trend over the six-year period. Starting at approximately $6.89 billion in 2019, it rose steadily each year, reaching nearly $9.60 billion by 2024. This represents a compound growth indicating ongoing expansion in the company’s sales or service volume.
- Operating Income Trend
- Operating income also increased annually from around $1.13 billion in 2019 to over $2.06 billion in 2024. The growth rate in operating income appears to outpace the revenue growth slightly, suggesting improving profitability at the operational level.
- Operating Profit Margin Analysis
- The operating profit margin shows a positive trend, rising from 16.45% in 2019 to 21.56% in 2024. Notably, the margin increased sharply between 2020 and 2021, from 16.41% to 19.47%, and continued to climb steadily thereafter. This improvement indicates enhanced operational efficiency or favorable cost management practices.
- General Observations
- The simultaneous increase in both revenue and operating income, along with the improving operating profit margin, suggests effective business growth and better cost control over the examined periods. The data reflects a healthy financial performance with growing scale and profitability.
Net Profit Margin
Cintas Corp., net profit margin calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).
1 2024 Calculation
Net profit margin = 100 × Net income ÷ Revenue
= 100 × ÷ =
The financial data reveals several noteworthy trends over the period analyzed. Both revenue and net income display consistent growth year-over-year, with revenue increasing from approximately $6.89 billion in 2019 to nearly $9.60 billion in 2024. This upward trajectory indicates a steady expansion in business operations or market demand.
Net income follows a similar upward pattern, rising from about $885 million in 2019 to approximately $1.57 billion in 2024. This substantial increase in net income suggests effective cost management and operational efficiencies alongside revenue growth.
The net profit margin experienced some fluctuations but generally maintained a strong and improving position. The margin started at 12.84% in 2019, saw a slight dip to 12.36% in 2020, and then recovered significantly to reach a peak of 16.38% by 2024. This trend indicates not only improved profitability but also an enhanced ability to convert revenue into net income, potentially due to improvements in cost control or pricing strategy.
- Revenue
- Increased steadily each year, growing by approximately 39% over the six-year period.
- Net Income
- More than doubled from 2019 to 2024, reflecting robust profit growth.
- Net Profit Margin
- Demonstrated resilience and improvement, recovering after a slight decline in 2020 and rising to its highest point in 2024.
Overall, the data indicates a company with a strong growth trajectory in both top-line and bottom-line measures, accompanied by an improving profitability ratio. The consistent rise in net profit margin in the latter years suggests enhanced operational efficiency or favorable market conditions contributing to greater profitability.
Return on Equity (ROE)
Cintas Corp., ROE calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).
1 2024 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × ÷ =
The financial data reveals several important trends over the analyzed periods. Net income has exhibited a generally positive trajectory, with a marked increase from 884,981 thousand US dollars in May 2019 to 1,571,592 thousand US dollars in May 2024. This reflects steady growth in profitability over the six-year timeframe, despite a slight dip in 2020.
Shareholders’ equity also shows growth, rising from 3,002,721 thousand US dollars in 2019 to 4,316,372 thousand US dollars in 2024. The equity values increased steadily with some fluctuations, including a decline in 2022, but the overall trend is upward indicating accumulated retained earnings and possibly capital contributions.
- Return on Equity (ROE)
- The ROE percentage displays variability, starting at 29.47% in 2019, decreasing slightly to 27.08% in 2020, then climbing to a peak of 37.35% in 2022. It settles somewhat lower at 36.41% in 2024 but remains elevated compared to earlier periods. This suggests improved efficiency in generating profits from shareholders’ equity, with the highest efficiency around 2022.
Overall, the data indicates that profitability and equity base have expanded significantly. The increasing ROE highlights effective management of equity resources to generate growing net income. The temporary dips in net income and equity in 2020 and 2022 could be attributable to external economic factors but did not interrupt the long-term upward trend.
Return on Assets (ROA)
Cintas Corp., ROA calculation, comparison to benchmarks
Based on: 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31).
1 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
- Net Income
- The net income shows a consistent upward trend over the period from May 31, 2019 to May 31, 2024. Starting at 884,981 thousand US dollars in 2019, it experienced a slight decline in 2020 to 876,037 thousand US dollars. Following this, net income increased steadily each year, reaching 1,571,592 thousand US dollars by 2024. This represents an overall substantial growth, indicative of improving profitability.
- Total Assets
- Total assets also display a steady growth trend across the same timeframe. Beginning at 7,436,662 thousand US dollars in 2019, the asset base expanded gradually each year, with some minor fluctuations. By 2024, total assets amounted to 9,168,817 thousand US dollars. This reflects a consistent asset growth, potentially supporting the company’s increasing income generation capacity.
- Return on Assets (ROA)
- The return on assets percentage demonstrates a clear improvement throughout the period. Starting at 11.9% in 2019, there was a slight dip in 2020 to 11.42%, followed by continuous annual increases culminating at 17.14% in 2024. This upward trajectory suggests enhanced efficiency in utilizing assets to generate net income over the years.
- Overall Analysis
- The data reveals a positive overall financial performance with growing profitability and asset base. The increase in net income combined with the rise in ROA indicates improved operational efficiency and effectiveness in asset utilization. The steady asset growth supports these improvements, highlighting a strengthening financial position over the five-year span.