Wednesday, August 17, 2016

Financial analysts can evaluate a company’s efficiency in any number of ways, but usually the task boils down to calculating one of several ratios: return on assets, return on capital, and return on equity.

Calcbench tracks all three ratios for all corporate filers in our Data Query Tool. So we decided to pull those statistics for the last five years, to see which large corporations (if any) consistently rank among the most efficient businesses in Corporate America.

We found three: Boeing, McDonald’s, and Nike.

We started by visiting our Data Query page, which is an awesome cheat sheet whenever you need to find broad trends quickly among a large pool of filers. We looked at the 30 companies in the Dow Jones Industrial Average, 2011 to 2015, and pulled all three “RO ratios”—return on assets, return on capital, and return on equity.

Next we sorted the data by year, and then by best ROA for the last five years. We identified the five companies with the best ROA for 2015, and each prior year back through 2011. Then we did the same for ROC and ROE.

No company ranked among the top five, year after year, on all three lists. Boeing, McDonald’s, and Nike, however, did rank among the top five on two lists, for all five years we studied:

  • Boeing was among the top five in ROE and ROC;
  • McDonald’s was among the top five for ROA and ROE;
  • Nike was among the top five for ROA and ROC.

We know that might be a bit difficult to read, so this matrix might help:

Placed in DJIA Top 5, 2011-2015
Return on Assets Return on Capital Return on Equity
Boeing No Yes Yes
McDonald’s Yes No Yes
Nike Yes Yes No

Anywhere you see a ‘yes’—that company has been in the top five of the Dow Jones Industrials for 2011 through 2015.

This configuration is not surprising when you think about the nature of these three businesses. Return on capital, for example, is a metric most useful for companies that need to invest lots of capital to grow—oil & gas, shipbuilders, even big-box stores. So it’s no surprise that a capital and equipment intensive company like Boeing would be on this list; it’s just impressive that Boeing is always on this list, and ranking near the top, five years in a row.

Conversely, McDonald’s doesn’t need to deploy anywhere near the physical assets that Boeing does; most of its stores are owned by franchisees. Nike falls somewhere between the two.

FREE Calcbench Premium
Two Week Trial

Research financial & accounting data like never before. Get features designed for better insights. Try our enhanced Excel Add-in. Sign up now to try the Premium Suite.