Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Profitability Ratios (Summary)
Apache Corp., profitability ratios
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
The financial data reveals a downward trend across all key profitability and return metrics over the observed five-year period.
- Gross profit margin
- There is a gradual decline from 82.74% in 2011 to 67.65% in 2015. The margin remained relatively stable around 79-80% between 2012 and 2014 before a notable decline in 2015, indicating reduced efficiency in managing production or direct costs relative to revenue.
- Operating profit margin
- This metric shows a sharp decline over time, dropping from a healthy 48.62% in 2011 to a negative -437.26% in 2015. The margin remained positive but halved by 2013, turned negative in 2014, and plummeted further in 2015, reflecting significant deterioration in core operating performance and likely elevated operating expenses or losses.
- Net profit margin
- The net margin follows a similar trajectory to operating margin, falling from 27.27% in 2011 to -362.2% in 2015. The spike into negative territory from 2014 suggests growing net losses likely due to increased costs, interest expenses, or other non-operating factors adversely impacting profitability.
- Return on equity (ROE)
- ROE decreases considerably from 15.81% in 2011 to a steep negative -900.97% in 2015. The decline through the years indicates the company's diminishing effectiveness in generating profit from shareholders' equity, with the sharp negative value in 2015 signaling extremely poor financial performance or large losses relative to equity.
- Return on assets (ROA)
- Similarly, ROA declines from 8.81% in 2011 to -122.7% in 2015, showing diminishing returns on asset base. The metric turns negative in 2014 and worsens in 2015, highlighting that asset utilization became inefficient or loss-generating in the most recent periods.
Overall, the trends denote a progressive weakening in profitability indicators and returns on investments over the five years, culminating in deeply negative margins and returns in the final two years. This suggests significant financial distress or operational challenges impacting the company’s capacity to generate profits and shareholder value.
Return on Sales
Return on Investment
Gross Profit Margin
Apache Corp., gross profit margin calculation
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Oil and gas production revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Gross profit margin = 100 × Gross profit ÷ Oil and gas production revenues
= 100 × ÷ =
- Gross Profit Trends
- Gross profit shows a consistent decline over the five-year period. Starting from 13,909 million USD in 2011, it decreased slightly to 13,676 million USD in 2012 and then to 13,049 million USD in 2013. The downward trend continued more sharply thereafter, with gross profit falling to 10,997 million USD in 2014 and reaching a notably lower value of 4,318 million USD by the end of 2015.
- Oil and Gas Production Revenues
- Oil and gas production revenues follow a similar downward pattern as gross profit. Revenues were relatively stable from 2011 to 2013, fluctuating around 16,800 to 16,400 million USD. However, a marked decline occurred starting in 2014, dropping to 13,749 million USD, and worsening further in 2015 with revenues decreasing significantly to 6,383 million USD.
- Gross Profit Margin
- The gross profit margin percentage also demonstrates a decreasing trend over the period analyzed. Beginning at 82.74% in 2011, it slightly declined over the next years, settling around 79-80% between 2012 and 2014. In 2015, there is a noticeable drop to 67.65%, indicating reduced profitability in relation to revenues during that year.
- Overall Analysis
- The financial data indicates a general weakening in both revenue generation and profitability over the five years. While the earlier years show relatively stable financial performance, the significant drops in 2014 and especially 2015 suggest external factors or operational challenges impacting the company's financial health. The substantial reduction in gross profit margin further supports the observation of diminishing efficiency or increased costs relative to revenue.
Operating Profit Margin
Apache Corp., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) | ||||||
| Oil and gas production revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Oil and gas production revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Income (Loss)
- The operating income exhibited a declining trend over the five-year period. Starting at a positive value of 8,173 million USD in 2011, it decreased sharply to 4,911 million USD in 2012 and continued to decline slightly to 4,738 million USD in 2013. This was followed by a significant downturn in 2014, resulting in an operating loss of 2,878 million USD, which further deepened dramatically in 2015 to a loss of 27,910 million USD. This pattern indicates a substantial deterioration in operational profitability.
- Oil and Gas Production Revenues
- Revenues from oil and gas production showed a gradual decrease throughout the period. Beginning at 16,810 million USD in 2011, revenues stabilized around 16,947 million in 2012 and slightly declined to 16,402 million in 2013. Thereafter, a more pronounced decline is observed, with revenues falling to 13,749 million USD in 2014 and then nearly halving to 6,383 million USD by the end of 2015. This trend suggests a significant contraction in sales or revenue-generating capacity over these years.
- Operating Profit Margin
- The operating profit margin followed a trajectory consistent with operating income and revenue trends, showing a steady decline and eventual negative values. Initially, the margin was healthy at 48.62% in 2011 but decreased sharply to approximately 29% in both 2012 and 2013. In 2014, the margin turned negative at -20.93%, indicating losses from operations exceeding revenues. The situation worsened considerably in 2015, with the margin plummeting to -437.26%, reflecting an extreme operational deficit relative to revenues.
- Summary
- Over the five-year span, the company experienced a marked decline in operational performance. Both operating income and oil and gas production revenues fell substantially, particularly in the final two years. The operating profit margin transitioned from strong positive values to substantial negative figures, signaling critical challenges in maintaining profitability. The data suggests exposure to adverse market conditions, declining production revenues or prices, increased costs, or other operational inefficiencies impacting financial health in 2014 and 2015.
Net Profit Margin
Apache Corp., net profit margin calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Apache shareholders | ||||||
| Oil and gas production revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Net profit margin = 100 × Net income (loss) attributable to Apache shareholders ÷ Oil and gas production revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations in the company's profitability and revenue generation over the analyzed period from 2011 to 2015.
- Net Income (Loss) Attributable to Shareholders (US$ in millions)
- A notable decline is observed in net income over the five years. The year 2011 saw a high net income of 4,584 million US dollars, which dropped sharply to 2,001 million in 2012. A modest recovery occurred in 2013 with net income increasing to 2,232 million, before plunging into losses in subsequent years, recording -5,403 million in 2014 and further deteriorating to -23,119 million in 2015. This trend indicates increasing financial difficulties culminating in substantial negative profitability in the last two years.
- Oil and Gas Production Revenues (US$ in millions)
- Revenues derived from oil and gas production followed a downward trajectory throughout the period. Starting at 16,810 million US dollars in 2011, the revenue remained relatively stable in 2012 at 16,947 million, then slightly declined to 16,402 million in 2013. A sharper decrease occurred in 2014 to 13,749 million, followed by an even steeper fall to 6,383 million in 2015. This consistent decline suggests challenges in either production volume, pricing, or market conditions impacting revenue streams significantly.
- Net Profit Margin (%)
- The net profit margin exhibited a similar pattern to net income, starting with a solid margin of 27.27% in 2011. This ratio decreased to 11.81% in 2012 and rose slightly to 13.61% in 2013, indicating decreased but positive profitability. However, the margin turned negative in 2014 with -39.3%, signalling losses relative to revenue. The downward trend accelerated dramatically in 2015, with the margin plummeting to -362.2%, reflecting severe losses disproportionate to revenues.
Overall, the data points to a period of declining financial health marked by increasing losses, diminishing revenues from core operations, and worsening profitability ratios. The sharp declines in net income and profit margins in the final two years suggest significant operational, market, or financial challenges impacting the company's earnings capacity and revenue streams.
Return on Equity (ROE)
Apache Corp., ROE calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Apache shareholders | ||||||
| Total Apache shareholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
ROE = 100 × Net income (loss) attributable to Apache shareholders ÷ Total Apache shareholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Apache Shareholders
- The net income showed a significant downward trend over the analyzed period. Starting at a positive US$4,584 million in 2011, it more than halved in 2012 to US$2,001 million and slightly recovered to US$2,232 million in 2013. However, the company experienced a substantial loss in 2014, with net income dropping to negative US$5,403 million. This negative trend intensified dramatically in 2015, with losses expanding to negative US$23,119 million. The pattern indicates growing financial challenges and deteriorating profitability over the five-year span.
- Total Apache Shareholders’ Equity
- Shareholders’ equity increased moderately between 2011 and 2013, from US$28,993 million to US$33,396 million, suggesting asset growth or retained earnings during this period. Towards the end of the period, equity sharply declined, falling to US$25,937 million in 2014 and drastically dropping further to US$2,566 million in 2015. This steep decrease corresponds with the significant losses reported, indicating erosion of shareholder value and possible impairment or write-downs.
- Return on Equity (ROE)
- ROE reflected the net income trend, starting at a healthy 15.81% in 2011, but declining steeply thereafter. It fell to 6.39% in 2012 and remained relatively stable at 6.68% in 2013 before plunging into negative territory at -20.83% in 2014. The situation worsened significantly in 2015, with ROE reaching an extreme negative value of -900.97%, evidencing severely diminished profitability relative to equity and highlighting the company’s critical financial distress in that year.
- Overall Financial Trend
- The data reveals a marked deterioration in financial performance and stability from 2011 through 2015. Initial profitability and equity growth reversed into substantial losses and equity erosion, accompanied by sharply negative returns for shareholders. These patterns suggest significant operational or market challenges impacting earnings and balance sheet strength in the final two years of the period.
Return on Assets (ROA)
Apache Corp., ROA calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Apache shareholders | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
ROA = 100 × Net income (loss) attributable to Apache shareholders ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net income (loss) attributable to Apache shareholders
- The net income shows a significant decline over the period. Starting at 4,584 million USD in 2011, it decreased sharply to 2,001 million USD in 2012, followed by a slight recovery to 2,232 million USD in 2013. Subsequently, the company suffered losses in 2014 and 2015, with net income turning negative at -5,403 million USD and further deteriorating to -23,119 million USD, reflecting a substantial worsening of profitability.
- Total assets
- Total assets increased from 52,051 million USD in 2011 to a peak of 61,637 million USD in 2013. Thereafter, total assets declined to 55,952 million USD in 2014 and experienced a pronounced reduction to 18,842 million USD in 2015. This sharp contraction in assets in the final year indicates a major change in the company’s asset base, possibly due to asset sales, impairments, or restructuring.
- Return on Assets (ROA)
- The ROA trend mirrors the net income pattern, beginning at a strong 8.81% in 2011 and dropping considerably to 3.29% in 2012 and 3.62% in 2013. In 2014, ROA turned negative at -9.66%, showing the company’s inefficient use of assets to generate profits due to losses. The measure further worsened dramatically to -122.7% in 2015, indicating an extremely negative financial performance relative to the asset base.
- Summary
- Overall, the data depict a company experiencing a severe deterioration in financial performance from 2011 through 2015. Profitability decreased sharply, culminating in significant losses during the last two years. The asset base expanded initially but contracted drastically by 2015. The profitability ratio ROA highlights the inefficiency in asset utilization caused by the sustained losses. The combination of declining asset size and worsening net income suggests heightened financial distress or significant operational challenges in the latter years.