Formula Systems (1985) (Formula Systems (1985)) Operating Income : $239 Mil (TTM As of Sep. 2023)

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What is Formula Systems (1985) Operating Income?

Formula Systems (1985)'s Operating Income for the three months ended in Sep. 2023 was $58 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Sep. 2023 was $239 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Formula Systems (1985)'s Operating Income for the three months ended in Sep. 2023 was $58 Mil. Formula Systems (1985)'s Revenue for the three months ended in Sep. 2023 was $655 Mil. Therefore, Formula Systems (1985)'s Operating Margin % for the quarter that ended in Sep. 2023 was 8.89%.

Good Sign:

Formula Systems (1985) Ltd operating margin is expanding. Margin expansion is usually a good sign.

Formula Systems (1985)'s 5-Year average Growth Rate for Operating Margin % was 9.50% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Formula Systems (1985)'s annualized ROC % for the quarter that ended in Sep. 2023 was 8.60%. Formula Systems (1985)'s annualized ROC (Joel Greenblatt) % for the quarter that ended in Sep. 2023 was 90.39%.

Formula Systems (1985) Operating Income Historical Data

The historical data trend for Formula Systems (1985)'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.

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Formula Systems (1985) Operating Income Chart

Formula Systems (1985) Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Operating Income

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138.49

170.64

208.02

232.38

239.37

Formula Systems (1985) Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Operating Income	Get a 7-Day Free Trial															60.13	60.79	59.98	58.25	60.34

Formula Systems (1985) 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 Sep. 2023 adds up the quarterly data reported by the company within the most recent 12 months, which was $239 Mil.

Formula Systems (1985) (NAS:FORTY) Operating Income Explanation

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

Formula Systems (1985)'s annualized ROC % for the quarter that ended in Sep. 2023 is calculated as:

	ROC % (Q: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	232.984 * ( 1 - 24.09% )	/	( (2085.933	+	2025.125)	/ 2 )
=	176.8581544	/	2055.529
=	8.60 %

where

	Invested Capital		(Q: Jun. 2023 )
=	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	))
=	2726.425	-	273.081	-	( 477.472	-	max(0, 923.958	-	1291.369	+	477.472	))
=	2085.933

	Invested Capital		(Q: Sep. 2023 )
=	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	))
=	2656.965	-	264.336	-	( 469.11	-	max(0, 904.466	-	1271.97	+	469.11	))
=	2025.125

Note: The Operating Income data used here is four times the quarterly (Sep. 2023) data.

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

Formula Systems (1985)'s annualized ROC (Joel Greenblatt) % for the quarter that ended in Sep. 2023 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Sep. 2023 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Jun. 2023		Q: Sep. 2023
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	232.984	/	( ( (172.092 + max(81.445, 0))	+	(160.332 + max(101.654, 0)) )	/	2 )
=	232.984	/	( ( 253.537	+	261.986 )	/	2 )
=	232.984	/	257.7615
=	90.39 %

where Working Capital is:

	Working Capital		(Q: Jun. 2023 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(698.141	+	39.374	+	-2.2737367544323E-13)	-	(273.081	+	136.39	+	246.599)
=	81.445

	Working Capital		(Q: Sep. 2023 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(692.798	+	37.156	+	2.2737367544323E-13)	-	(264.336	+	124.345	+	239.619)
=	101.654

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Sep. 2023) EBIT data.

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

Formula Systems (1985)'s Operating Margin % for the quarter that ended in Sep. 2023 is calculated as:

Operating Margin %	=	Operating Income (Q: Sep. 2023 )	/	Revenue (Q: Sep. 2023 )
	=	58.246	/	654.839
	=	8.89 %

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.

Formula Systems (1985) Operating Income Related Terms

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Formula Systems (1985) (Formula Systems (1985)) Business Description

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GURUFOCUS.COM » STOCK LIST » Technology » Software » Formula Systems (1985) Ltd (NAS:FORTY) » Definitions » Operating Income

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FORTY:Israel FSY:Germany FSY:Germany

Address

Yahadut Canada 1 Street, Or Yehuda, Tel Aviv, ISR, 6037501

Website

https://www.formulasystems.com

Formula Systems (1985) Ltd is a holding company that, through its subsidiaries, provides information technology services. The company organizes itself into three primary segments based on the subsidiary. The Matrix segment, which generates the majority of revenue, provides software development and existing software expansion services. The Sapiens segment provides software development services for the insurance industry. The Magic Software segment provides vendor management systems and workforce management services, which include accounting and finance, human resources, IT technology, and marketing and sales. Michpal; ZAP Group and Others. The majority of the company's revenue comes from Israel.