Definition:

1-year Operating Income per Share Growth Rate measures the percentage change in a company's operating income per share over a one-year period. It indicates how effectively a company is increasing its operating income on a per-share basis, reflecting operational efficiency and profitability improvements.

Formula:

((Operating Income per Share at End of Year - Operating Income per Share at Start of Year) / Operating Income per Share at Start of Year) * 100

How to use the metric:

This metric is used by investors and analysts to assess a company's operational performance and growth potential. A positive growth rate suggests that the company is improving its operational efficiency and profitability, while a negative rate may indicate potential issues in the company's operations.

Limitations:

The metric does not account for external factors such as market conditions or industry trends that may impact operating income. It also does not consider changes in capital structure or one-time events that could affect operating income. Additionally, it may not provide a complete picture of a company's financial health if used in isolation.

Applies to:

This metric is particularly useful in industries where operating income is a key performance indicator, such as manufacturing, retail, and technology, where operational efficiency and cost management are critical.

Doesn't apply to:

Industries with significant regulatory impacts or those heavily reliant on external factors, such as utilities or financial services, may find this metric less applicable. This is because operating income in these sectors can be influenced by factors beyond the company's control, making the growth rate less indicative of operational performance.

Summary:

The 1-year Operating Income per Share Growth Rate is a valuable metric for evaluating a company's operational performance and growth over a short period. While it provides insights into efficiency and profitability, it should be used alongside other financial metrics to gain a comprehensive understanding of a company's financial health.