Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Paying user area
Try for free
National Oilwell Varco Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Operating Profit Margin since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to National Oilwell Varco Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Profitability Ratios (Summary)
National Oilwell Varco Inc., 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).
- Gross Profit Margin
- The gross profit margin exhibited a downward trend from 30.68% in 2011 to 20.76% in 2015. The margin decreased notably in 2013 to 24%, rebounded somewhat in 2014 to 27.09%, but then declined sharply in 2015, indicating increasing cost pressures or reduced pricing power over the period.
- Operating Profit Margin
- The operating profit margin showed a similar declining pattern, starting at 20.04% in 2011 and falling steadily to a negative margin of -2.64% in 2015. Despite minor improvements between 2013 and 2014, the margin turned negative in 2015, suggesting substantial operational challenges or increased operating expenses that outweighed revenues in that year.
- Net Profit Margin
- The net profit margin declined gradually from 13.6% in 2011 to -5.21% in 2015. This decrease followed the same pattern as operating margin, with a slight improvement in 2014 before plunging into negative territory in 2015. This reflects deteriorating overall profitability, likely impacted by both operational inefficiencies and possibly higher non-operating costs or losses.
- Return on Equity (ROE)
- ROE remained relatively stable during 2011 to 2014, fluctuating between 10.47% and 12.31%, but experienced a stark decline to -4.69% in 2015. This reversal indicates a significant reduction in shareholder value generation, which corresponds with negative net income and possibly equity impairments or losses during that year.
- Return on Assets (ROA)
- ROA trended downward gradually from 7.82% in 2011 to 6.68% in 2013, followed by a minor recovery to 7.45% in 2014, but then declined sharply to -2.88% in 2015. The pattern aligns with the net profit margin trend, indicating reduced efficiency in asset utilization to generate profits, culminating in a negative return in the final year.
Return on Sales
Return on Investment
Gross Profit Margin
National Oilwell Varco Inc., gross 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) | ||||||
| Gross profit | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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 ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data indicates several notable trends over the five-year period from 2011 to 2015. A detailed analysis reveals shifts in revenue, gross profit, and profitability margins.
- Revenue
- The revenue increased significantly from 2011 to 2013, rising from approximately 14.7 billion US dollars to over 22.8 billion US dollars. In 2014, revenue experienced a slight decline to about 21.4 billion US dollars, followed by a sharp decrease in 2015 to roughly 14.8 billion US dollars, returning to near the 2011 level.
- Gross Profit
- Gross profit showed growth from 2011 through 2014, increasing steadily from about 4.5 billion US dollars to nearly 5.8 billion US dollars. However, 2015 saw a significant decline, with gross profit dropping to slightly over 3 billion US dollars, nearly halving from the previous year's figure. This decrease corresponds with the reduction in revenue observed in the same year.
- Gross Profit Margin
- The gross profit margin demonstrates a downward trend throughout the period, starting at approximately 30.7% in 2011. It fell to around 26.6% in 2012 and decreased further to 24% in 2013. There was a modest recovery in 2014 when the margin rose to about 27.1%, but the margin declined sharply to around 20.8% in 2015. This indicates a worsening efficiency in converting revenue into gross profit over time, especially pronounced in the final year analyzed.
Overall, the data highlights a trend of rapid growth in revenue and gross profit during the early years, followed by a downturn in 2014 and a significant contraction in 2015. The declining gross profit margin suggests increasing cost pressures or pricing challenges affecting profitability. The sharp decrease in both revenue and gross profit in 2015 points to a challenging business environment during that year, necessitating further analysis of market conditions and operational factors driving these changes.
Operating Profit Margin
National Oilwell Varco Inc., 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 profit (loss) | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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 profit (loss) ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
- Operating Profit (Loss)
- The operating profit increased steadily from 2011 to 2014, rising from 2,937 million US dollars to a peak of 3,613 million US dollars. However, in 2015, there was a sharp decline, resulting in a loss of 390 million US dollars. This indicates a significant downturn in profitability in the final year of the period analyzed.
- Revenue
- Revenue showed consistent growth for the first three years, increasing from 14,658 million US dollars in 2011 to 22,869 million US dollars in 2013. In 2014, revenue declined slightly to 21,440 million US dollars and then dropped more sharply to 14,757 million US dollars in 2015, almost returning to the 2011 level. This suggests a decrease in sales or orders in the latter part of the period.
- Operating Profit Margin
- The operating profit margin exhibited a downward trend over the period. It decreased from 20.04% in 2011 to 16.85% in 2014, maintaining relatively strong profitability but demonstrating declining efficiency. In 2015, the margin turned negative, reaching -2.64%, indicating that operating losses exceeded revenues, which aligns with the reported operating loss for the year.
Net Profit Margin
National Oilwell Varco Inc., 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 Company | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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 Company ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Company
- The net income attributable to the company showed an increasing trend from 2011 to 2014, rising from 1994 million US dollars to 2502 million US dollars. This represents consistent growth over four years. However, in 2015 there was a significant decline, with net income turning negative to a loss of 769 million US dollars.
- Revenue
- Revenue exhibited a strong upward trend from 2011 through 2013, increasing from 14,658 million US dollars to 22,869 million US dollars. In 2014, revenue slightly decreased to 21,440 million US dollars and sharply declined in 2015, falling back to 14,757 million US dollars, close to the 2011 level.
- Net Profit Margin
- The net profit margin followed a downward trajectory despite initial stability. It decreased from 13.6% in 2011 to 12.43% in 2012, then further to 10.18% in 2013, before a slight recovery to 11.67% in 2014. In 2015, this margin turned negative to -5.21%, consistent with the net loss reported that year.
- Overall Analysis
- The data indicate a period of growth and profitability from 2011 to 2014, marked by increasing revenues and net income. However, 2015 reflects a pronounced downturn with significant reductions in revenue accompanied by a transition from profit to loss, evidenced by a negative net profit margin. This suggests operational challenges or external factors adversely affecting the company’s financial performance during that year.
Return on Equity (ROE)
National Oilwell Varco Inc., 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 Company | ||||||
| Total Company stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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 Company ÷ Total Company stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Company
- The net income demonstrated a generally positive trend from 2011 through 2014, increasing from 1,994 million USD in 2011 to 2,491 million USD in 2012. It slightly declined to 2,327 million USD in 2013 but rebounded to 2,502 million USD in 2014, indicating relative stability with some fluctuation. However, a significant deterioration occurred in 2015, reflected in a net loss of 769 million USD, signaling notable financial challenges or adverse conditions impacting profitability during that year.
- Total Company Stockholders’ Equity
- Stockholders' equity experienced consistent growth from 2011 to 2013, rising from 17,619 million USD to 22,230 million USD, suggesting accumulation of retained earnings or capital contributions. In 2014, equity slightly decreased to 20,692 million USD and then further declined sharply to 16,383 million USD in 2015. This downward trend in the last two years may be associated with the net loss recorded in 2015 and potential distributions or other equity-reducing actions.
- Return on Equity (ROE)
- ROE followed a similar pattern to net income, beginning at 11.32% in 2011 and increasing to 12.31% in 2012. It then declined to 10.47% in 2013 but rose to 12.09% in 2014, reflecting effective utilization of equity to generate profits during these periods. In 2015, ROE turned negative to -4.69%, indicating a loss relative to shareholders’ equity and highlighting the company's diminished profitability and potential operational or market difficulties in that year.
Return on Assets (ROA)
National Oilwell Varco Inc., 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 Company | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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 Company ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income (Loss) Attributable to Company
- Net income demonstrated a generally positive trend from 2011 to 2014, with values rising from 1994 million US dollars in 2011 to a peak of 2502 million US dollars in 2014. However, a significant decline occurred in 2015, with net income turning negative to a loss of 769 million US dollars.
- Total Assets
- Total assets showed a continuous increase from 25515 million US dollars in 2011 to a peak of 34812 million US dollars in 2013. Following this peak, assets slightly decreased in 2014 and then dropped more substantially to 26725 million US dollars in 2015.
- Return on Assets (ROA)
- Return on assets remained relatively stable between 2011 and 2014, fluctuating within a narrow range from 6.68% to 7.91%. In 2015, ROA experienced a sharp decline, becoming negative at -2.88%, reflecting reduced profitability relative to asset base and corresponding with the reported net loss.