Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Analysis of Revenues
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Profitability Ratios (Summary)
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 financial data reveals several notable trends over the five-year period.
- Gross profit margin
- The gross profit margin showed some fluctuations, beginning at 49.84% in 2019, declining slightly to 48.66% in 2020, then increasing to 49.44% in 2021. There was a notable dip to 46.41% in 2022, followed by a recovery to 49.81% in 2023, almost reaching the initial level reported in 2019. This pattern suggests some variability in the cost structure or pricing strategy, with a dip in 2022 potentially signaling increased costs or pricing pressure during that year.
- Operating profit margin
- The operating profit margin started at 20.05% in 2019 and decreased to 18.65% in 2020. It rebounded slightly to 20.4% in 2021 but again dropped to 18.23% in 2022 before rising significantly to 22.99% in 2023. The margin exhibited a fluctuating trend with an eventual strong improvement in 2023, which could indicate better cost management or higher operational efficiency in the most recent period.
- Net profit margin
- Net profit margin showed steady improvement over the years, increasing from 11.01% in 2019 to 12.8% in 2020, 15.24% in 2021, and maintaining a high level at 14.96% in 2022. In 2023, it further increased to 17.13%. This upward trend reflects enhanced profitability at the bottom line, suggesting effective control over expenses and potentially favorable tax or financial circumstances.
- Return on equity (ROE)
- Return on equity data is available only for 2022 and 2023, with extraordinarily high values of 1175% and 236.05%, respectively. Such extreme figures might indicate a significant reduction in shareholders' equity or unusual accounting events in those years. The sharp decline from 1175% in 2022 to 236.05% in 2023, although still very high, suggests some normalization or correction after an exceptionally high return in 2022.
- Return on assets (ROA)
- The return on assets increased consistently from 8.16% in 2019 to 8.73% in 2020, 10.21% in 2021, 10.64% in 2022, and reached 12.81% in 2023. This steady upward movement indicates improving efficiency in asset utilization and growing profitability relative to the company's asset base.
Overall, profitability metrics generally strengthened over the period, with net profit margin and return on assets showing consistent improvement. The fluctuations in gross and operating profit margins point to variable cost conditions or operational dynamics affecting intermediate profitability. The ROE figures are anomalously high for the last two years, suggesting extraordinary financial circumstances that merit further investigation.
Return on Sales
Return on Investment
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 | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
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 × ÷ =
2 Click competitor name to see calculations.
- Net Sales
- Net sales displayed an overall upward trend during the five-year period. Starting at 7,887 million USD in 2019, net sales slightly declined to 7,414 million USD in 2020. However, from 2020 onwards, net sales increased steadily, reaching 9,978 million USD by the end of 2023. This indicates growth in the company's revenue-generating capabilities after a minor setback in 2020.
- Gross Margin
- Gross margin showed fluctuations but demonstrated a general increase over the analyzed duration. Beginning at 3,931 million USD in 2019, it decreased to 3,608 million USD in 2020, paralleling the decline in net sales. Subsequently, gross margin improved consistently, achieving 4,970 million USD in 2023. This upward movement reflects enhanced efficiency or favorable cost management contributing to higher absolute gross profit.
- Gross Profit Margin Percentage
- The gross profit margin percentage exhibited some variability within the period. It started at 49.84% in 2019, dipped slightly to 48.66% in 2020, and recovered to 49.44% in 2021. A notable decline occurred in 2022, with the margin decreasing to 46.41%, before a strong rebound to 49.81% in 2023, the highest level observed. This pattern suggests fluctuating cost structures or pricing strategies but concluding with improved profitability efficiency in the latest year.
- Summary
- Overall, the financial data indicates a resilient growth trajectory despite temporary setbacks in 2020. Both net sales and gross margin display upward momentum, while the gross profit margin percentage shows variability, with a particularly significant recovery in 2023. Improvement in gross profit margin percentage alongside growing net sales and gross margin values points to strengthened operational performance and potential enhancements in cost management.
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 | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Technology Hardware & Equipment | ||||||
| Operating Profit Margin, Industry | ||||||
| Information Technology | ||||||
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 Click competitor name to see calculations.
- Operating earnings
- The operating earnings demonstrated a fluctuating pattern over the five-year period. Starting from 1,581 million USD in 2019, there was a decline in 2020 to 1,383 million USD. This was followed by a recovery and increase to 1,667 million USD in 2021, remaining relatively stable in 2022 at 1,661 million USD, before experiencing a significant rise to 2,294 million USD in 2023. This indicates a strong recovery and growth in profitability in the latest year.
- Net sales
- Net sales showed a generally upward trajectory throughout the period. Sales decreased slightly from 7,887 million USD in 2019 to 7,414 million USD in 2020, potentially reflecting external challenges during that year. From 2021 onwards, net sales consistently increased, reaching 8,171 million USD in 2021, 9,112 million USD in 2022, and 9,978 million USD in 2023. This trend emphasizes a steady expansion in revenue-generating activities.
- Operating profit margin
- The operating profit margin exhibited variability over the years. It started at 20.05% in 2019 and declined to 18.65% in 2020. In 2021, the margin improved to 20.4%, followed by a drop to 18.23% in 2022. The margin then increased significantly to 22.99% in 2023, marking the highest point in the five-year span. This suggests enhanced operating efficiency and cost control in the most recent year.
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. | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Technology Hardware & Equipment | ||||||
| Net Profit Margin, Industry | ||||||
| Information Technology | ||||||
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 × ÷ =
2 Click competitor name to see calculations.
- Net Earnings
- The net earnings attributable showed a consistent upward trend from 2019 to 2023. Starting at $868 million in 2019, there was steady growth each year, reaching $1709 million in 2023. The increase was particularly notable from 2021 onwards, indicating improved profitability or operational efficiency during the latter period.
- Net Sales
- Net sales exhibited a generally positive trajectory over the analyzed period. Sales declined slightly from $7887 million in 2019 to $7414 million in 2020, possibly reflecting external challenges during that year. However, sales rebounded strongly from 2020 onwards, increasing every year to reach $9978 million by 2023, demonstrating a recovery and ongoing growth in revenue generation.
- Net Profit Margin
- The net profit margin showed a marked improvement over the five-year period. Starting at 11.01% in 2019, it increased to 12.8% in 2020 and continued rising to 15.24% in 2021. There was a slight dip in 2022 to 14.96%, but the margin recovered and achieved its highest level at 17.13% in 2023. This trend reflects an overall enhancement in profitability relative to sales.
- Overall Insights
- The data indicates sustained growth in both earnings and sales, accompanied by improved profit margins. The initial dip in sales in 2020 did not prevent the company from enhancing profitability, as demonstrated by higher net earnings and profit margin during the same period. The strengthening profit margin suggests effective cost management or greater pricing power. By 2023, the financial indicators point to robust performance, with net earnings increasing substantially faster than sales, highlighting increasing operational efficiency or favorable market conditions.
Return on Equity (ROE)
Motorola Solutions Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to Motorola Solutions, Inc. | ||||||
| Total Motorola Solutions, Inc. stockholders’ equity (deficit) | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
| ROE, Sector | ||||||
| Technology Hardware & Equipment | ||||||
| ROE, Industry | ||||||
| Information Technology | ||||||
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 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period from 2019 to 2023. The net earnings attributable to the company show a consistent upward trajectory. Starting at 868 million US dollars in 2019, net earnings increased steadily each year, culminating in a substantial 1709 million US dollars in 2023. This represents nearly a doubling of net earnings over the period, indicating strong profitability growth.
Regarding the stockholders’ equity, the figures demonstrate a significant positive turnaround. The equity was negative at -700 million US dollars in 2019, suggesting the company was in a deficit position at that time. This deficit gradually reduced over the subsequent years, moving to -558 million in 2020 and -40 million in 2021. By 2022, the company recorded positive equity of 116 million US dollars, which further increased notably to 724 million US dollars in 2023. This shift from negative to positive equity reflects an improved financial position and potentially enhanced shareholder value.
The return on equity (ROE) data is partially presented, with values only for 2022 and 2023. ROE reached an exceptionally high level of 1175% in 2022, followed by a still elevated but reduced figure of 236.05% in 2023. These ROE figures are unusually high, likely influenced by the low equity base transitioning from a prior deficit, which can inflate the ratio. Nevertheless, the positive ROE percentages indicate the company was generating substantial returns on its equity during these years.
- Key insights:
- 1. Consistent and strong growth in net earnings over the five-year span.
- 2. Marked improvement in stockholders’ equity from a significant deficit in 2019 to solid positive equity in 2023.
- 3. Exceptionally high ROE in the final two years, possibly due to a low equity base moving from negative to positive territory.
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. | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
| ROA, Sector | ||||||
| Technology Hardware & Equipment | ||||||
| ROA, Industry | ||||||
| Information Technology | ||||||
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 × ÷ =
2 Click competitor name to see calculations.
The financial data exhibits a positive and consistent growth trajectory over the five-year period. Net earnings attributable to the company demonstrate a steady increase, rising from $868 million in 2019 to $1,709 million in 2023. This represents almost a doubling of net earnings within this timeframe, indicating improved profitability and possibly effective operational strategies or market conditions favoring the company.
Total assets have also shown a gradual increase, growing from $10,642 million in 2019 to $13,336 million in 2023. The asset base expansion suggests the company has been investing in its resources, which may support future growth or business activities. However, the rate of asset growth is slower compared to the growth in net earnings.
The return on assets (ROA) metric further underscores the improvement in overall efficiency and profitability. ROA increased from 8.16% in 2019 to 12.81% in 2023. This rising ROA indicates that the company has enhanced its ability to generate earnings from its asset base, achieving higher profitability per dollar of assets employed.
- Net Earnings
- Consistent upward trend with an increase from $868 million to $1,709 million over five years.
- Total Assets
- Progressive growth from $10,642 million to $13,336 million, reflecting ongoing investments and resource expansion.
- Return on Assets (ROA)
- Improved efficiency indicated by growth from 8.16% to 12.81%, showing better asset utilization to generate profits.
In summary, the data reflects a company strengthening its profitability and operational efficiency over time while gradually expanding its asset base. The growth in ROA signals effective management of assets to yield higher returns, supported by increasing net earnings and moderate asset growth.