Advanced Micro Devices Inc. (NASDAQ:AMD)

The analysis of key financial ratios over the five-year period reveals notable trends in operational efficiency, leverage, profitability, and returns.

Asset Turnover

Both reported and adjusted total asset turnover ratios exhibited a decline starting from 2022 after peaking in 2021. The reported total asset turnover decreased sharply from 1.32 in 2021 to 0.35 in 2022, maintaining a similar level through 2024 with minor fluctuations toward 0.37. The adjusted measure followed a nearly identical pattern, declining from 1.43 in 2021 to 0.35 in 2022 and slightly increasing to 0.38 by 2024. This suggests a significant reduction in asset utilization efficiency beginning in 2022, which did not fully recover by 2024.

Leverage Ratios

Debt to equity and debt to capital ratios, both reported and adjusted, generally trended downward over the period. The reported debt to equity ratio decreased from 0.06 in 2020 to 0.03 in 2024, indicating reduced reliance on debt relative to shareholders' equity. The adjusted ratio also declined, although initially higher, from 0.12 in 2020 to 0.04 in 2024. Reported and adjusted debt to capital ratios mirrored this decrease. Financial leverage ratios showed a downward trend after peaking in 2021; reported financial leverage dropped from 1.66 in 2021 to 1.20 by 2024, with the adjusted value showing a similar decline from 1.73 to 1.19 over the same interval. This overall decrease in leverage points to a more conservative capital structure with less debt usage.

Profit Margins

Reported net profit margin displayed a marked decline between 2021 and 2022, falling from 19.24% to 5.59%, with further decreases in 2023 before a partial recovery to 6.36% in 2024. The adjusted net profit margin showed greater volatility, starting at 13.38% in 2020, peaking at 21.08% in 2021, and then turning negative in 2022 and 2023 (-0.89% and -0.50%, respectively), before rebounding modestly to 2.37% in 2024. This indicates significant challenges to profitability in recent years, particularly visible in the adjusted figures which may incorporate additional adjustments.

Return on Equity (ROE)

Reported ROE was strong and stable around 42% in 2020 and 2021 but plunged sharply to single digits in 2022 and remained low through 2024, with a slight upward trend to 2.85%. Adjusted ROE followed a similar pattern but showed even greater variability, rising to 52.26% in 2021 before turning negative in 2022 and 2023, then slightly improving in 2024. The drop in ROE alongside falling net margins suggests diminished profitability impacting shareholder returns.

Return on Assets (ROA)

Reported ROA paralleled the pattern observed in ROE and net margins, dropping from 27.78% in 2020 and 25.46% in 2021 to below 2.5% in the subsequent years with gradual improvement to 2.37% by 2024. Adjusted ROA showed a similar trend: a peak in 2021 at 30.15%, turning negative in 2022 and 2023, and a modest positive recovery of 0.89% by 2024. This decline reflects decreased efficiency in generating profit from the asset base during the latter period.

In summary, the financial ratios indicate that the company experienced high operational efficiency, leverage stability, and profitability through 2021, followed by a marked deterioration beginning in 2022. There is evidence of reduced asset turnover and profit margins, substantial decreases in returns on equity and assets, and a concurrent reduction in financial leverage. Partial recovery signs are seen toward 2024 but performance remains substantially below peak levels observed two years prior.

The analysis of the financial data over the five-year period reveals several notable trends and shifts in performance metrics.

Net Revenue

Net revenue exhibited a consistent upward trajectory from 2020 to 2024. Beginning at $9,763 million in 2020, revenue grew substantially to $16,434 million in 2021 and continued this upward trend to $23,601 million in 2022. Although there was a slight decline to $22,680 million in 2023, the revenue rebounded to reach a peak of $25,785 million in 2024. Overall, this indicates strong growth in sales with minor short-term fluctuations.

Total Assets

Total assets showed a significant increase, particularly between 2021 and 2022. From $8,962 million in 2020, total assets grew to $12,419 million in 2021, followed by a dramatic surge to $67,580 million in 2022. This elevated asset base remained relatively stable in the subsequent years, with values around $67,885 million in 2023 and $69,226 million in 2024. This pattern suggests substantial asset acquisitions or revaluations occurred around 2022.

Reported Total Asset Turnover

The reported total asset turnover ratio, which measures efficiency in using assets to generate revenue, declined sharply in 2022, from 1.32 in 2021 to 0.35 in 2022. This low level persisted in 2023 (0.33) with a slight increase in 2024 (0.37). Despite the increased revenue levels, the efficiency ratio indicates that assets were not being utilized as effectively post-2021, possibly due to the large increase in asset base.

Adjusted Total Assets

Adjusted total assets followed a similar pattern to total assets with a steady increase from $7,717 million in 2020 to $11,488 million in 2021, then a sharp jump to $67,522 million in 2022. The values remained stable for 2023 and 2024 at approximately $67,519 million and $68,538 million respectively, reinforcing the observation of asset expansion in 2022.

Adjusted Total Asset Turnover

The adjusted total asset turnover mirrored the trend in the reported metric, showing high ratios in 2020 (1.27) and 2021 (1.43), followed by a significant decline to 0.35 in 2022. It decreased slightly to 0.34 in 2023 with a modest recovery to 0.38 in 2024. This pattern again highlights reduced efficiency in asset utilization following the substantial asset growth.

In summary, the data indicates robust revenue growth accompanied by a major increase in asset base starting in 2022. However, this asset increase has led to a decline in turnover ratios, signaling a temporary reduction in operational efficiency in utilizing assets to generate revenue. The slight recovery in turnover in 2024 suggests gradual improvement in asset productivity. Monitoring the relationship between asset growth and revenue generation will be crucial for future financial performance assessment.

The financial data shows significant developments in both debt and equity components over the five-year period. Total debt initially decreased from 330 million US dollars in 2020 to 313 million in 2021, followed by a substantial increase to 2,467 million in 2022, where it remained relatively stable in 2023 before declining to 1,721 million in 2024. This trend suggests a marked increase in borrowing or liabilities in 2022, with some reduction by the end of 2024.

Stockholders’ equity exhibited strong growth throughout the period. Starting at 5,837 million US dollars in 2020, equity increased modestly to 7,497 million in 2021, then surged to 54,750 million in 2022. The equity base remained stable after this peak, rising slightly to 55,892 million in 2023 and 57,568 million in 2024. Such a substantial increase in equity indicates significant capital accumulation, potentially through retained earnings, equity issuance, or valuation adjustments.

The reported debt to equity ratio remained very low and stable, oscillating slightly between 0.06 and 0.03 over the years, reflecting a conservative leverage position when considering reported figures.

When adjusted figures are analyzed, adjusted total debt follows a similar pattern to reported total debt but on a higher scale, increasing from 572 million in 2020 to a peak of 3,109 million in 2023, before decreasing to 2,321 million in 2024. Adjusted stockholders’ equity also increased significantly from 4,640 million in 2020 to 56,691 million in 2022, then stabilized with minor increases in the subsequent years, reaching 57,506 million in 2024.

Accordingly, the adjusted debt to equity ratio decreased from 0.12 in 2020 to 0.04 in 2024, indicating an overall reduction in leverage relative to the company's adjusted equity base. The drop in this ratio suggests an improvement in the company’s financial stability and strength despite the increase in absolute debt levels after 2021.

Overall, the data reveals a company that dramatically increased its equity base starting in 2022, alongside increased debt levels. However, the relatively stable and declining debt-to-equity ratios imply that debt growth has been overshadowed by even stronger equity growth, reflecting an improving capital structure and potential for increased financial resilience.

The financial data reveals several key trends pertaining to the debt and capital structure over the observed five-year period.

Total Debt

There was a slight decrease in total debt from 330 million USD in 2020 to 313 million USD in 2021. However, a sharp increase occurred in 2022, with total debt rising significantly to 2,467 million USD and remaining almost stable in 2023 at 2,468 million USD, before decreasing to 1,721 million USD in 2024. This indicates a major shift in debt levels starting in 2022, with a partial reduction observed in 2024.

Total Capital

Total capital showed a consistent upward trend from 6,167 million USD in 2020 to 7,810 million USD in 2021. A substantial surge was noted in 2022 when total capital jumped markedly to 57,217 million USD, followed by moderate increases in 2023 and 2024, reaching 59,289 million USD by the end of the period. This pronounced increase from 2022 suggests significant capital infusions or revaluations starting that year.

Reported Debt to Capital Ratio

This ratio decreased slightly from 0.05 in 2020 to 0.04 in 2021 and remained stable at 0.04 through 2022 and 2023, before declining further to 0.03 in 2024. The steady reduction in this ratio despite increasing total capital reflects improved leverage or a relatively lower debt burden in relation to capital.

Adjusted Total Debt

Adjusted total debt rose from 572 million USD in 2020 to 732 million USD in 2021, then sharply increased to 2,956 million USD in 2022 and 3,109 million USD in 2023, before decreasing to 2,321 million USD in 2024. This pattern mirrors the movement seen in total debt but with slightly higher values, indicating certain debt adjustments accounted for over the period.

Adjusted Total Capital

Adjusted total capital rose progressively from 5,212 million USD in 2020 to 7,361 million USD in 2021, then sharply increased to 59,647 million USD in 2022. It remained nearly steady thereafter in 2023 and 2024, ending at 59,827 million USD. This confirms the large upward revaluation or addition to capital noted in the total capital figures.

Adjusted Debt to Capital Ratio

This ratio decreased from 0.11 in 2020 to 0.10 in 2021, followed by a marked decline to 0.05 in 2022 and stability at 0.05 in 2023, then further down to 0.04 in 2024. The continuous decrease indicates enhanced capital structure strength with relatively lower adjusted debt exposure through the recent years.

Overall, the data reveals a significant transformation beginning in 2022 characterized by a considerable rise in capital levels and increased debt obligations, both reported and adjusted. Despite these increases, the debt-to-capital ratios show a declining trend, signifying an overall reduction in leverage and an improved capital base supporting the company's financial stability towards the most recent period reported.

Total Assets

Total assets show a significant increase from 2020 to 2022, rising sharply from $8.96 billion to $67.58 billion, indicating rapid expansion or acquisition activity during this period. From 2022 to 2024, total assets stabilize around the $67 to $69 billion range, suggesting that the rapid growth phase plateaued and asset levels have been maintained.

Stockholders’ Equity

Stockholders’ equity also experienced a substantial increase from $5.84 billion in 2020 to $54.75 billion in 2022. This growth mirrors the increase in total assets, indicating strong capital investment or retained earnings. In subsequent years (2023 and 2024), equity continues to grow but at a much slower pace, reaching $57.57 billion by the end of 2024, which reflects more stable growth in equity capital.

Reported Financial Leverage

The reported financial leverage ratio increased modestly from 1.54 in 2020 to 1.66 in 2021, then decreased markedly to 1.23 in 2022, remaining relatively stable thereafter around 1.20 by 2024. This trend suggests a reduction in reliance on debt relative to equity after 2021, with the company maintaining a lower leverage profile in recent years.

Adjusted Total Assets

Adjusted total assets exhibit a similar pattern to total assets, increasing from $7.72 billion in 2020 to $67.52 billion in 2022. The values then hold steady through 2023 and 2024 around $68 billion, reinforcing the observation of stabilization after rapid asset growth.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity increased substantially from $4.64 billion in 2020 to $56.69 billion in 2022. It remains relatively stable with slight incremental growth through 2023 and 2024, reaching approximately $57.51 billion. This confirms sustained equity strength over the latter period.

Adjusted Financial Leverage

The adjusted financial leverage ratio follows a similar trajectory to the reported leverage, increasing from 1.66 in 2020 to 1.73 in 2021, then decreasing to approximately 1.19 from 2022 onwards. This suggests consistent capital structure management aimed at maintaining lower leverage ratios after the peak in 2021.

Net Income

The net income increased significantly from 2,490 million USD in 2020 to a peak of 3,162 million USD in 2021. However, it then declined sharply to 1,320 million USD in 2022 and further to 854 million USD in 2023. There was a partial recovery in 2024, with net income rising to 1,641 million USD.

Net Revenue

Net revenue showed a consistent upward trend over the five-year period, growing from 9,763 million USD in 2020 to 25,785 million USD in 2024. The most notable increase occurred between 2020 and 2022, followed by a slight dip in 2023 before recovering again in 2024.

Reported Net Profit Margin

The reported net profit margin decreased substantially from 25.5% in 2020 to 3.77% in 2023, indicating a significant reduction in profitability relative to revenue. In 2024, there was a modest improvement to 6.36%, yet the margin remains considerably lower than in earlier years.

Adjusted Net Income

Adjusted net income mirrored the trend seen in net income but presented more volatility. It increased from 1,306 million USD in 2020 to 3,464 million USD in 2021, then turned negative in 2022 (-209 million USD) and 2023 (-114 million USD), before returning to a positive figure of 611 million USD in 2024. This suggests the presence of significant one-time or non-recurring items affecting adjusted earnings during 2022 and 2023.

Adjusted Net Profit Margin

The adjusted net profit margin also followed a similar pattern, growing from 13.38% in 2020 to 21.08% in 2021, before dropping below zero (-0.89% in 2022 and -0.5% in 2023). The margin improved slightly to 2.37% in 2024, reflecting the partial recovery in adjusted net income but still indicating weak profitability compared to earlier years.

Summary Insights

Overall, the data shows strong revenue growth over the analyzed period, contrasting with declining profitability metrics after 2021. The widening gap between rising revenues and shrinking profit margins suggests increased costs or other pressures limiting earnings. The volatility in adjusted net income and margins, especially the negative values in 2022 and 2023, points to significant extraordinary items or operational challenges during those years. Although there is some recovery in 2024, profitability remains below earlier peak levels, indicating ongoing challenges in translating revenue growth into sustained profit improvement.

Net income

Between 2020 and 2021, net income increased substantially from 2,490 million USD to 3,162 million USD. However, a notable decline occurred in 2022, dropping sharply to 1,320 million USD. This downward trend continued into 2023 with a further decrease to 854 million USD. By 2024, net income showed partial recovery, increasing to 1,641 million USD, although still below the 2020 and 2021 levels.

Stockholders’ equity

Stockholders’ equity demonstrated a strong positive trend, rising significantly from 5,837 million USD in 2020 to 7,497 million USD in 2021. A dramatic increase is observed in 2022, surging to 54,750 million USD. This elevated level remained relatively stable through 2023 and 2024, with slight increases to 55,892 million USD and 57,568 million USD respectively.

Reported Return on Equity (ROE)

Reported ROE was high in 2020 and 2021 at 42.66% and 42.18%, respectively. From 2022 onwards, there was a sharp decline, dropping to 2.41% in 2022 and continuing downward to 1.53% in 2023. By 2024, it slightly rebounded to 2.85%. The decrease correlates with the substantial increase in equity and the declining net income figures observed in the same period.

Adjusted net income

Adjusted net income grew from 1,306 million USD in 2020 to 3,464 million USD in 2021, consistent with the trend in reported net income. However, the years 2022 and 2023 saw adjusted net income turn negative, recording losses of 209 million USD and 114 million USD, respectively. In 2024, adjusted net income returned to positive territory at 611 million USD, indicating some recovery but remaining below prior peak levels.

Adjusted stockholders’ equity

Adjusted stockholders’ equity rose from 4,640 million USD in 2020 to 6,629 million USD in 2021, before experiencing a substantial increase to 56,691 million USD in 2022. This elevated base was maintained with marginal increases in 2023 and 2024, reaching 56,813 million USD and 57,506 million USD respectively, paralleling the trend in reported equity values.

Adjusted Return on Equity (ROE)

Adjusted ROE climbed from 28.15% in 2020 to a peak of 52.26% in 2021, reflecting strong profitability relative to adjusted equity. Subsequently, the ratio turned negative in 2022 and 2023, with values of -0.37% and -0.2%, consistent with the adjusted net income losses during those years. By 2024, adjusted ROE improved to a modest positive value of 1.06%, denoting early signs of regained profitability.

The financial data reveals a complex set of trends over the analyzed periods.

Net Income

Net income demonstrated growth from 2490 million USD in 2020 to a peak of 3162 million USD in 2021. Subsequently, there was a significant decline in 2022, falling to 1320 million USD, which further decreased to 854 million USD in 2023. The figure showed partial recovery in 2024, rising to 1641 million USD. This suggests volatility and challenges impacting profitability after 2021 with signs of gradual improvement towards 2024.

Total Assets

Total assets experienced a steady upward trend throughout the periods. Starting from 8962 million USD in 2020, assets increased to 12419 million USD in 2021, followed by a substantial surge to 67580 million USD in 2022. Growth continued modestly in 2023 and 2024, reaching 69226 million USD by the end of the last period. This indicates significant asset accumulation after 2021, which may relate to expansion or acquisition activity.

Reported Return on Assets (ROA)

The reported ROA remained strong at 27.78% in 2020 and slightly declined to 25.46% in 2021. Post-2021, ROA dramatically dropped to 1.95% in 2022 and further decreased to 1.26% in 2023, followed by a slight increase to 2.37% in 2024. The sharp decline corresponds with the surge in total assets and dropping net income, suggesting reduced efficiency in asset utilization during these years.

Adjusted Net Income

Adjusted net income trends diverged from reported net income. There was an increase from 1306 million USD in 2020 to 3464 million USD in 2021, followed by a steep reversal to negative territory in 2022 and 2023, at -209 million USD and -114 million USD respectively. A return to positive adjusted net income is noted in 2024, with 611 million USD. This highlights underlying operational or non-recurring difficulties particularly in 2022 and 2023.

Adjusted Total Assets

Adjusted total assets followed a similar pattern to reported total assets, increasing from 7717 million USD in 2020 to 11488 million USD in 2021, then sharply rising to around 67522 million USD in 2022. There was relative stability thereafter, with minor increases to 67519 million USD in 2023 and 68538 million USD in 2024. This consistency suggests the adjusted asset base closely tracks the reported assets, confirming significant asset growth in recent years.

Adjusted Return on Assets (Adjusted ROA)

Adjusted ROA was 16.92% in 2020, rising notably to 30.15% in 2021. Afterwards, it declined into negative values in 2022 (-0.31%) and 2023 (-0.17%), then slightly recovered to 0.89% in 2024. This pattern mirrors adjusted net income performance, underscoring operational challenges and weaker profitability on an adjusted basis during the middle periods before some recovery.