Hospira (FRA:HOS) Operating Income : €527 Mil (TTM As of Jun. 2015)

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What is Hospira Operating Income?

Hospira's Operating Income for the three months ended in Jun. 2015 was €195 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Jun. 2015 was €527 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Hospira's Operating Income for the three months ended in Jun. 2015 was €195 Mil. Hospira's Revenue for the three months ended in Jun. 2015 was €1,055 Mil. Therefore, Hospira's Operating Margin % for the quarter that ended in Jun. 2015 was 18.47%.

Warning Sign:

Hospira Inc operating margin has been in 5-year decline. The average rate of decline per year is -28%.

Hospira's 5-Year average Growth Rate for Operating Margin % was -28.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Hospira's annualized ROC % for the quarter that ended in Jun. 2015 was 12.37%. Hospira's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2015 was 31.22%.

Hospira Operating Income Historical Data

The historical data trend for Hospira's Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Hospira Operating Income Chart

Hospira Annual Data

Trend

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Operating Income

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392.52

43.17

44.81

12.12

378.17

Hospira Quarterly Data
	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15
Operating Income	Get a 7-Day Free Trial															73.23	176.54	32.20	123.26	194.77

Hospira Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Jun. 2015 adds up the quarterly data reported by the company within the most recent 12 months, which was €527 Mil.

Hospira (FRA:HOS) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Hospira's annualized ROC % for the quarter that ended in Jun. 2015 is calculated as:

	ROC % (Q: Jun. 2015 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2015 )	+	Invested Capital (Q: Jun. 2015 ))	/ count )
=	779.092 * ( 1 - 30.19% )	/	( (4539.149	+	4253.634)	/ 2 )
=	543.8841252	/	4396.3915
=	12.37 %

where

	Invested Capital		(Q: Mar. 2015 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	6051.83	-	917.902	-	( 594.779	-	max(0, 1038.853	-	2576.482	+	594.779	))
=	4539.149

	Invested Capital		(Q: Jun. 2015 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	6044.366	-	1060.201	-	( 730.531	-	max(0, 1062.696	-	2681.643	+	730.531	))
=	4253.634

Note: The Operating Income data used here is four times the quarterly (Jun. 2015) data.

2. Joel Greenblatt's definition of Return on Capital:

Hospira's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2015 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Jun. 2015 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Mar. 2015		Q: Jun. 2015
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	788.356	/	( ( (1711.895 + max(842.688, 0))	+	(1701.186 + max(794.059, 0)) )	/	2 )
=	788.356	/	( ( 2554.583	+	2495.245 )	/	2 )
=	788.356	/	2524.914
=	31.22 %

where Working Capital is:

	Working Capital		(Q: Mar. 2015 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(550.519	+	1091.244	+	235.343)	-	(917.902	+	0	+	116.516)
=	842.688

	Working Capital		(Q: Jun. 2015 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(523.908	+	1089.158	+	241.194)	-	(1060.201	+	0	+	0)
=	794.059

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Jun. 2015) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Hospira's Operating Margin % for the quarter that ended in Jun. 2015 is calculated as:

Operating Margin %	=	Operating Income (Q: Jun. 2015 )	/	Revenue (Q: Jun. 2015 )
	=	194.773	/	1054.588
	=	18.47 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Hospira Operating Income Related Terms

Thank you for viewing the detailed overview of Hospira's Operating Income provided by GuruFocus.com. Please click on the following links to see related term pages.

Hospira (FRA:HOS) Business Description

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Address

Website

http://www.hospira.com

Hospira Inc was incorporated in Delaware on September 16, 2003.Â The Company is a provider of injectable drugs and infusion technologies, and is also engaged in developing, manufacturing, marketing and distribution. Its portfolio includes generic acute-care and oncology injectables, biosimilars, and integrated infusion therapy and medication management products. Its portfolio of products is used by hospitals and alternate site providers, such as clinics, home healthcare providers and long-term care facilities. The Company's business segments are Specialty Injectable Pharmaceuticals, Medication Management and Other Pharmaceuticals. Specialty Injectable Pharmaceuticals consists of generic injectable pharmaceuticals products. Generic injectable pharmaceuticals provide customers with a lower-cost alternative to branded products when associated patent protection expires, when patents are declared invalid, or when the generic products do not infringe the patents of others. Our generic injectable pharmaceuticals are sold in therapeutic areas including analgesia, anesthesia, anti-infectives, cardiovascular, oncology, and other. Medication Management offer the Hospira MedNet safety software system, which is designed for hospitals to customize intravenous drug dosage limits and track drug delivery to prevent medication errors. The wireless network version of the Hospira MedNet system establishes real-time send-and-receive capability and can interface with select hospital and pharmacy information systems. Other Pharmaceuticals primarily consists of large volume I.V. solutions, nutritionals and contract manufacturing services. We offer infusion therapy solutions and related supplies that include I.V. solutions for general use, I.V. nutrition products, and solutions for washing and cleansing of wounds or surgical sites. The Company's primary customers include hospitals, wholesalers, integrated delivery networks and alternate site facilities. Its competitors include Baxter International Inc.; Becton, Dickinson and Company; Fresenius Kabi AG; Mallinckrodt plc; Mylan Inc; Par Pharmaceuticals Companies, Inc.; Pfizer Inc.; Sandoz; Sanofi S.A. and Teva Pharmaceuticals, Aspen Medical; Fresenius Kabi; Pfizer; Sandoz and a number of smaller competitors and the originator companies. The Company's operations and business activities are subject to extensive legal and regulatory requirements that are enforced by numerous governmental agencies in the countries in which it do business.

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