Varian Medical Systems (Varian Medical Systems) Operating Income : $427 Mil (TTM As of Dec. 2020)

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What is Varian Medical Systems Operating Income?

Varian Medical Systems's Operating Income for the three months ended in Dec. 2020 was $125 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Dec. 2020 was $427 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Varian Medical Systems's Operating Income for the three months ended in Dec. 2020 was $125 Mil. Varian Medical Systems's Revenue for the three months ended in Dec. 2020 was $779 Mil. Therefore, Varian Medical Systems's Operating Margin % for the quarter that ended in Dec. 2020 was 16.04%.

Warning Sign:

Varian Medical Systems Inc operating margin has been in 5-year decline. The average rate of decline per year is -2.3%.

Varian Medical Systems's 5-Year average Growth Rate for Operating Margin % was -2.30% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Varian Medical Systems's annualized ROC % for the quarter that ended in Dec. 2020 was 12.20%. Varian Medical Systems's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2020 was 61.57%.

Varian Medical Systems Operating Income Historical Data

The historical data trend for Varian Medical Systems'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.

Varian Medical Systems Operating Income Chart

Varian Medical Systems Annual Data

Trend

Sep11

Sep12

Sep13

Sep14

Sep15

Sep16

Sep17

Sep18

Sep19

Sep20

Operating Income

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432.10

351.10

496.20

499.60

424.80

Varian Medical Systems Quarterly Data
	Mar16	Jun16	Sep16	Dec16	Mar17	Jun17	Sep17	Dec17	Mar18	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20
Operating Income	Get a 7-Day Free Trial															122.70	90.90	88.20	123.00	124.90

Varian Medical Systems 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 Dec. 2020 adds up the quarterly data reported by the company within the most recent 12 months, which was $427 Mil.

Varian Medical Systems (NYSE:VAR) Operating Income Explanation

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

Varian Medical Systems's annualized ROC % for the quarter that ended in Dec. 2020 is calculated as:

	ROC % (Q: Dec. 2020 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2020 )	+	Invested Capital (Q: Dec. 2020 ))	/ count )
=	499.6 * ( 1 - 22.19% )	/	( (3308.5	+	3063.6)	/ 2 )
=	388.73876	/	3186.05
=	12.20 %

where

	Invested Capital		(Q: Sep. 2020 )
=	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	))
=	4462.2	-	404.9	-	( 766.1	-	max(0, 1854.5	-	2603.3	+	766.1	))
=	3308.5

	Invested Capital		(Q: Dec. 2020 )
=	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	))
=	4526.1	-	689.2	-	( 773.3	-	max(0, 1744.9	-	2641.3	+	773.3	))
=	3063.6

Note: The Operating Income data used here is four times the quarterly (Dec. 2020) data.

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

Varian Medical Systems's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2020 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Dec. 2020 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Sep. 2020		Q: Dec. 2020
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	502.8	/	( ( (465.9 + max(368.3, 0))	+	(466 + max(333.1, 0)) )	/	2 )
=	502.8	/	( ( 834.2	+	799.1 )	/	2 )
=	502.8	/	816.65
=	61.57 %

where Working Capital is:

	Working Capital		(Q: Sep. 2020 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(1066.1	+	516.3	+	254.8)	-	(404.9	+	875.6	+	188.4)
=	368.3

	Working Capital		(Q: Dec. 2020 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(1029.3	+	571.7	+	267)	-	(689.2	+	845.7	+	0)
=	333.1

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Dec. 2020) EBIT data.

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

Varian Medical Systems's Operating Margin % for the quarter that ended in Dec. 2020 is calculated as:

Operating Margin %	=	Operating Income (Q: Dec. 2020 )	/	Revenue (Q: Dec. 2020 )
	=	124.9	/	778.8
	=	16.04 %

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.

Varian Medical Systems Operating Income Related Terms

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

Varian Medical Systems (Varian Medical Systems) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Devices & Instruments » Varian Medical Systems Inc (NYSE:VAR) » Definitions » Operating Income

Comparable Companies

Traded in Other Exchanges

N/A

Address

3100 Hansen Way, Palo Alto, CA, USA, 94304-1038

Website

https://www.varian.com

Varian Medical Systems designs, manufactures, and sells radiation technology for use in two business segments: oncology systems and proton therapy. The Americas account for the largest portion of revenue (47%), followed by Europe, the Middle East, and Africa (33%) and Asia-Pacific (19%).

Executives

Jesse Michael Bruff	officer: SVP Finance, CFO	3100 HANSEN WAY, PALO ALTO CA 94304
Magnus Momsen	officer: SVP, CAO, Corporate Controller	VARIAN MEDICAL SYSTEMS INC. 3100 HANSEN WAY MAIL STOP E327 PALO ALTO CA 94304
Dow R Wilson	director, officer: President and CEO	VARIAN MEDICAL SYSTEMS INC, 3100 HANSEN WAY MAIL STOP E327, PALO ALTO CA 94304
Kolleen T Kennedy	officer: Pres. Proton Solutions, CGO	VARIAN MEDICAL SYSTEMS INC, 3100 HANSEN WAY MAIL STOP E327, PALO ALTO CA 94304
Christopher A. Toth	officer: SVP and Pres. Oncology Systems	1252 COOLIDGE AVE., SAN JOSE CA 95125
Michael Damon Hutchinson	officer: SVP,Chief Legal Officer, Secy	2825 AIRVIEW BLVD, KALAMAZOO MI 49002
Jean Luc Butel	director	ONE BAXTER PARKWAY, DEERFIELD IL 60015
John W Kuo	officer: SVP, Gen Counsel and Secretary	VARIAN MEDICAL SYSTEMS INC, 3100 HANSEN WAY MAIL STOP E327, PALO ALTO CA 94304
Judy Bruner	director	C/O SANDISK CORPORATION, 601 MCCARTHY BLVD., MILPITAS CA 95035
Beau Michelle Le	director	800 N. MICHIGAN AVENUE #3703 CHICAGO IL 60611
Anat Ashkenazi	director	LILLY CORPORATE CENTER, INDIANAPOLIS IN 46285
Jeffrey R. Balser	director	3657 RICHLAND AVE., NASHVILLE TN 37205
Regina E Dugan	director	VARIAN MEDICAL SYSTEMS INC, 3100 HANSEN WAY MAIL STOP E327, PALO ALTO CA 94304
David J Illingworth	director	3100 HANSEN WAY PALO ALTO CA 94304
R Andrew Eckert	director	THREE RAVINIA DRIVE, ATLANTA GA 30346