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.
Richard Skolnik. "Operating Return Trends." New York Economic Review. vol. 33, Fall 2002, p. 42-50
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