Episode Details

The end game in business, sustainability and ESG distractions aside, is to generate profits and create value. In this session, I look at profitability, by first breaking down an income statements, and using the many measure of profits there to get a handle on business economics - gross margin for unit economics, operating margins for economies of scale and EBITDA margins for capital intensity. After looking at the profit margins for businesses around the world, broken down by sector/industry and region, I scale profits to invested capital to get accounting measures of return on equity and capital. These returns, when compared to costs of equity and capital, become a (noisy) shorthand for value creation, and the data in 2024 suggests that value creation is difficult, with 70% of companies earning less than the cost of capital.
Slides: https://pages.stern.nyu.edu/~adamodar/pdfiles/blog/DataUpdate7for2025.pdf
Blog Post: https://aswathdamodaran.blogspot.com/2025/02/data-update-7-for-2025-end-game-in.html
Data links:
Margin data (US): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html
Excess return data (US): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/EVA.html
For other markets go to my webpage, and look under current data.

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