Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Norfolk Southern Corp., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The asset activity ratios for the period between 2017 and 2021 exhibit a pattern of relative stability, characterized by a notable synchronized decline in 2020 and a subsequent recovery in 2021. While asset-based turnover ratios remained within a narrow range, the turnover of equity demonstrated a more pronounced upward trajectory over the five-year horizon.
- Net Fixed Asset Turnover
- The efficiency of fixed asset utilization remained consistent, peaking at 0.37 in 2018 before declining to a period low of 0.31 in 2020. A recovery to 0.35 was observed by the end of 2021. The negligible difference between the standard net fixed asset turnover and the ratio including right-of-use assets indicates that the inclusion of operating leases does not materially alter the perceived efficiency of the company's long-term investment base.
- Total Asset Turnover
- Total asset turnover closely mirrored the trends seen in fixed asset utilization, moving from 0.30 in 2017 to a peak of 0.32 in 2018. A decline to 0.26 occurred in 2020, followed by a recovery to 0.29 in 2021. This correlation suggests that the overall asset efficiency is heavily influenced by the performance of the company's fixed asset investments.
- Equity Turnover
- Equity turnover showed the highest degree of volatility and growth. The ratio increased from 0.64 in 2017 to 0.75 in 2018, followed by a period of relative stability and a dip to 0.66 in 2020. By 2021, equity turnover reached a five-year peak of 0.82, indicating a significant improvement in the company's ability to generate revenue relative to its shareholders' equity.
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Net Fixed Asset Turnover
Norfolk Southern Corp., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Railway operating revenues | 11,142) | 9,789) | 11,296) | 11,458) | 10,551) | |
| Properties less accumulated depreciation | 31,653) | 31,345) | 31,614) | 31,091) | 30,330) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 0.35 | 0.31 | 0.36 | 0.37 | 0.35 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| FedEx Corp. | 2.35 | — | — | — | — | |
| Uber Technologies Inc. | 9.42 | — | — | — | — | |
| Union Pacific Corp. | 0.40 | — | — | — | — | |
| United Airlines Holdings Inc. | 0.77 | — | — | — | — | |
| United Parcel Service Inc. | 2.91 | — | — | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Transportation | 1.55 | — | — | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Industrials | 2.72 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover = Railway operating revenues ÷ Properties less accumulated depreciation
= 11,142 ÷ 31,653 = 0.35
2 Click competitor name to see calculations.
The analysis of long-term investment activity from 2017 to 2021 indicates a period of relative stability in asset utilization, punctuated by a significant contraction in 2020. The relationship between railway operating revenues and the net fixed asset base reveals that efficiency gains were primarily driven by revenue fluctuations rather than aggressive changes in the asset structure.
- Net Fixed Asset Turnover Trend
- The net fixed asset turnover ratio exhibited a fluctuating but generally stable pattern, starting at 0.35 in 2017 and peaking at 0.37 in 2018. A subsequent decline occurred in 2019 to 0.36, followed by a sharp drop to 0.31 in 2020, which represents the lowest point of asset efficiency in the period. By 2021, the ratio recovered to 0.35, returning to its 2017 baseline.
- Revenue Volatility and Asset Efficiency
- The observed changes in the turnover ratio correlate closely with movements in railway operating revenues. The peak efficiency in 2018 coincided with the highest revenue figure of 11,458 million US$. Conversely, the 2020 trough in turnover was a direct result of revenues falling to 9,789 million US$, indicating that the decline in asset productivity was driven by a reduction in top-line performance rather than an over-investment in fixed assets.
- Fixed Asset Base Stability
- Properties less accumulated depreciation remained remarkably consistent throughout the five-year period. The asset base grew modestly from 30,330 million US$ in 2017 to 31,653 million US$ in 2021. This stability suggests a disciplined approach to capital expenditure and depreciation, ensuring that the underlying infrastructure remained constant while the company navigated external revenue pressures.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Norfolk Southern Corp., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Railway operating revenues | 11,142) | 9,789) | 11,296) | 11,458) | 10,551) | |
| Properties less accumulated depreciation | 31,653) | 31,345) | 31,614) | 31,091) | 30,330) | |
| Operating lease ROU assets (classified in Other assets) | 411) | 433) | 539) | —) | —) | |
| Properties less accumulated depreciation (including operating lease, right-of-use asset) | 32,064) | 31,778) | 32,153) | 31,091) | 30,330) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 0.35 | 0.31 | 0.35 | 0.37 | 0.35 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| FedEx Corp. | 1.64 | — | — | — | — | |
| Uber Technologies Inc. | 5.39 | — | — | — | — | |
| Union Pacific Corp. | 0.38 | — | — | — | — | |
| United Airlines Holdings Inc. | 0.67 | — | — | — | — | |
| United Parcel Service Inc. | 2.63 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Transportation | 1.33 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Industrials | 2.34 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Railway operating revenues ÷ Properties less accumulated depreciation (including operating lease, right-of-use asset)
= 11,142 ÷ 32,064 = 0.35
2 Click competitor name to see calculations.
The analysis of asset utilization from 2017 to 2021 indicates a period of relative stability in the net fixed asset turnover ratio, despite significant fluctuations in railway operating revenues.
- Railway Operating Revenues Trend
- Operating revenues experienced volatility over the five-year period. Following an increase to 11,458 million US$ in 2018, revenues declined to a low of 9,789 million US$ in 2020, representing a notable contraction. A recovery was observed in 2021, with revenues returning to 11,142 million US$.
- Fixed Asset Base Evolution
- The net properties, including operating lease right-of-use assets, showed a consistent upward trajectory from 2017 (30,330 million US$) through 2019 (32,153 million US$). This asset base remained largely stable thereafter, ending 2021 at 32,064 million US$, suggesting a consistent level of long-term investment in infrastructure and capital assets.
- Net Fixed Asset Turnover Interpretation
- The net fixed asset turnover ratio fluctuated within a narrow range between 0.31 and 0.37. Peak efficiency was observed in 2018 at 0.37, coinciding with the highest recorded revenue for the period. The ratio declined to its lowest point of 0.31 in 2020, which is directly attributable to the decline in operating revenues while the asset base remained nearly constant. By 2021, the ratio returned to 0.35, indicating a restoration of asset productivity to levels seen in 2017 and 2019.
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Total Asset Turnover
Norfolk Southern Corp., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Railway operating revenues | 11,142) | 9,789) | 11,296) | 11,458) | 10,551) | |
| Total assets | 38,493) | 37,962) | 37,923) | 36,239) | 35,711) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.29 | 0.26 | 0.30 | 0.32 | 0.30 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| FedEx Corp. | 1.01 | — | — | — | — | |
| Uber Technologies Inc. | 0.45 | — | — | — | — | |
| Union Pacific Corp. | 0.34 | — | — | — | — | |
| United Airlines Holdings Inc. | 0.36 | — | — | — | — | |
| United Parcel Service Inc. | 1.40 | — | — | — | — | |
| Total Asset Turnover, Sector | ||||||
| Transportation | 0.76 | — | — | — | — | |
| Total Asset Turnover, Industry | ||||||
| Industrials | 0.58 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Total asset turnover = Railway operating revenues ÷ Total assets
= 11,142 ÷ 38,493 = 0.29
2 Click competitor name to see calculations.
The analysis of long-term investment activity indicates a period of fluctuation in asset efficiency between 2017 and 2021. While the asset base grew consistently throughout the period, operating revenues experienced volatility, resulting in a non-linear trend in the total asset turnover ratio.
- Railway Operating Revenues
- Revenues peaked in 2018 at 11,458 million USD before experiencing a notable decline to a period low of 9,789 million USD in 2020. A recovery phase is evident in 2021, with revenues increasing to 11,142 million USD, returning close to the levels observed in 2017 and 2019.
- Total Asset Growth
- A steady upward trajectory is observed in the total asset base, which increased from 35,711 million USD in 2017 to 38,493 million USD by 2021. This consistent expansion of the capital base occurred independently of the fluctuations in annual operating revenues.
- Total Asset Turnover Performance
- The total asset turnover ratio reached a peak of 0.32 in 2018, driven by the highest revenue levels of the period relative to the asset base. The ratio declined to its lowest point of 0.26 in 2020, a result of the simultaneous contraction in revenues and the continued growth of total assets. By 2021, the ratio improved to 0.29, reflecting a recovery in asset productivity as revenues rebounded.
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Equity Turnover
Norfolk Southern Corp., equity turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Railway operating revenues | 11,142) | 9,789) | 11,296) | 11,458) | 10,551) | |
| Stockholders’ equity | 13,641) | 14,791) | 15,184) | 15,362) | 16,359) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 0.82 | 0.66 | 0.74 | 0.75 | 0.64 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| FedEx Corp. | 3.47 | — | — | — | — | |
| Uber Technologies Inc. | 1.21 | — | — | — | — | |
| Union Pacific Corp. | 1.54 | — | — | — | — | |
| United Airlines Holdings Inc. | 4.90 | — | — | — | — | |
| United Parcel Service Inc. | 6.83 | — | — | — | — | |
| Equity Turnover, Sector | ||||||
| Transportation | 3.40 | — | — | — | — | |
| Equity Turnover, Industry | ||||||
| Industrials | 2.63 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Equity turnover = Railway operating revenues ÷ Stockholders’ equity
= 11,142 ÷ 13,641 = 0.82
2 Click competitor name to see calculations.
The analysis of equity turnover from 2017 to 2021 reveals a volatile yet generally ascending trend in the efficiency with which shareholders' equity is utilized to generate operating revenue. While external pressures caused a temporary contraction in performance, the period concluded with the highest efficiency ratio observed in the five-year span.
- Revenue Performance
- Railway operating revenues exhibited fluctuation, increasing from US$ 10,551 million in 2017 to a peak of US$ 11,458 million in 2018. A significant contraction occurred in 2020, where revenues dropped to US$ 9,789 million, before recovering to US$ 11,142 million in 2021.
- Equity Base Evolution
- A consistent downward trend is observed in stockholders' equity. The equity base declined steadily every year, moving from US$ 16,359 million in 2017 to US$ 13,641 million by the end of 2021. This sustained reduction in equity has fundamentally altered the denominator of the turnover calculation.
- Equity Turnover Ratio Analysis
- The equity turnover ratio increased from 0.64 in 2017 to 0.82 in 2021. The ratio rose to 0.75 in 2018 and remained stable at 0.74 in 2019. A decline to 0.66 was recorded in 2020, directly correlating with the drop in operating revenues. The subsequent rise to 0.82 in 2021 was driven by the simultaneous recovery of revenues and the continued decrease in the equity base, resulting in a higher revenue-to-equity efficiency.
The overall progression indicates that the improvement in the equity turnover ratio is not solely a product of revenue growth, but is significantly influenced by the contraction of the company's equity base over the analyzed period.
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