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Operating Return Trends

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  • Richard Skolnik

Abstract

This study examines the operating returns, margins and turnovers of non-financial S&P 500 companies from 1982-1999. At the aggregate level, operating return remains relatively stable during the time period and exhibits no trend. However, asset turnover displays a steady decrease, which is offset by increasing profit margins. The cross-sectional analysis indicates that although margin and turnover both contribute to superior return, margin is more highly correlated to return. Consistent with economic theory for a competitive equilibrium environment, margin and turnover are negatively correlated with each other in both the cross-sectional and time-series analyses. Operating returns do not exhibit a trend but they vary cyclically with changes in GDP.

Suggested Citation

  • Richard Skolnik, 2002. "Operating Return Trends," New York Economic Review, New York State Economics Association (NYSEA), vol. 33(1), pages 42-50.
    • Handle: RePEc:nye:nyervw:v:33:y:2002:i:1:p:42-50
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