Advanced Micro Devices Inc. (NASDAQ:AMD)

Return on Assets (ROA)

The return on assets shows a significant decline from 27.78% in 2020 to 1.95% in 2022, followed by a further decrease to 1.26% in 2023. There is a modest recovery in 2024 reaching 2.37%, indicating reduced efficiency in generating profit from assets compared to earlier years, but with slight improvement towards the end of the period.

Financial Leverage

Financial leverage increased from 1.54 in 2020 to 1.66 in 2021, suggesting a greater use of debt or liabilities relative to equity at that time. Subsequently, the ratio decreased consistently over the following years to 1.23 in 2022, 1.21 in 2023, and 1.20 in 2024, reflecting a gradual reduction in leverage and possibly a more conservative capital structure.

Return on Equity (ROE)

Return on equity experienced a similar trend to ROA, with a high of 42.66% in 2020 and 42.18% in 2021, sharply decreasing to 2.41% in 2022, then further declining to 1.53% in 2023. This was followed by a partial recovery to 2.85% in 2024. The data indicates a marked drop in the company’s ability to generate profit from shareholders’ equity after 2021, with only slight improvement in the latter period.

The analyzed financial indicators exhibit distinct trends over the five-year period under review. The company's profitability, asset utilization, leverage, and overall return to shareholders reveal notable fluctuations and shifts.

Net Profit Margin

The net profit margin shows a declining trend from 25.5% in 2020 to a low of 3.77% in 2023, followed by a slight recovery to 6.36% in 2024. This indicates the company's decreasing efficiency in converting revenue into profit during most of the period, with a partial improvement toward the end.

Asset Turnover

Asset turnover experienced an initial increase from 1.09 in 2020 to 1.32 in 2021, suggesting improved usage of assets to generate sales. However, from 2022 onward, there was a marked decrease down to approximately 0.33-0.37, indicating a reduction in asset efficiency in the later years.

Financial Leverage

Financial leverage increased from 1.54 in 2020 to 1.66 in 2021, implying a higher use of debt relative to equity. Subsequently, leverage declined steadily to 1.20 by 2024, reflecting a more conservative capital structure with reduced reliance on debt financing across the later years.

Return on Equity (ROE)

ROE maintained a high level above 40% in 2020 and 2021, then precipitously dropped to as low as 1.53% in 2023, slightly recovering to 2.85% in 2024. This significant decrease mirrors the decline seen in net profit margin and asset turnover, indicating a sharp reduction in the company's profitability and efficiency in generating returns for shareholders during the three most recent years.

Overall, the data reveals a period of strong performance in 2020 and 2021, followed by considerable deterioration in profitability, asset efficiency, and shareholder returns from 2022 through 2024. The improvement in net profit margin and modest stabilization of asset turnover and financial leverage towards the end of the period could suggest initial signs of recovery or adjustment strategies being implemented.

Tax Burden

The tax burden ratio shows significant fluctuations over the analyzed periods. It starts relatively high at 1.95 in 2020, then decreases sharply to 0.86 in 2021, rises slightly to 1.1 in 2022, increases further to 1.68 in 2023, and then decreases again to 0.81 in 2024. The irregular pattern indicates varying impacts of tax expenses on profitability across the years.

Interest Burden

The interest burden remains relatively stable with minor variations. It maintains a high level close to 1.0 from 2020 through 2024, indicating consistent interest expenses relative to earnings before interest and taxes. A slight dip to 0.83 in 2023 suggests temporarily higher interest costs or lower EBIT in that year.

EBIT Margin

The EBIT margin experiences a strong peak in 2021 at 22.57%, which represents a period of elevated operating profitability. However, it declines sharply in 2022 to 5.45%, continues to fall to 2.71% in 2023, then recovers partially to 8.2% in 2024. This suggests that operating efficiency and profitability faced considerable pressure in the latter years.

Asset Turnover

Asset turnover shows a declining trend from 1.09 in 2020, increasing slightly to 1.32 in 2021, but then dropping steeply to 0.35 in 2022, with similarly low levels of 0.33 and 0.37 in 2023 and 2024 respectively. This pattern indicates a reduced efficiency in utilizing assets to generate revenue after 2021.

Financial Leverage

Financial leverage increased slightly from 1.54 in 2020 to 1.66 in 2021, signalling higher use of debt or borrowed capital. After 2021, leverage decreases steadily to 1.23 in 2022, then remains relatively stable around 1.2 in the following years. This points to a reduction in reliance on debt financing after 2021, sustaining moderate leverage afterwards.

Return on Equity (ROE)

Return on equity shows a strong performance in 2020 and 2021, with values above 40%, reflecting robust profitability for shareholders. Subsequently, ROE declines sharply in 2022 to 2.41%, drops further to 1.53% in 2023, before a slight improvement to 2.85% in 2024. This significant downturn demonstrates challenges in generating shareholder returns in recent years despite moderate recovery at the end of the period.

The financial data shows significant fluctuations in profitability and efficiency ratios over the five-year period.

Net Profit Margin

The net profit margin demonstrates a declining trend from 25.5% in 2020 to a low of 3.77% in 2023, followed by a slight recovery to 6.36% in 2024. This indicates a substantial reduction in profitability relative to sales over the period, with some improvement in the latest year but still significantly below the initial levels.

Asset Turnover

The asset turnover ratio increased from 1.09 in 2020 to 1.32 in 2021, suggesting more efficient use of assets to generate revenue during this time. However, there was a steep decline to 0.35 in 2022 and further marginal decreases through 2023 and 2024, settling at 0.37. This pattern reflects a marked reduction in operational efficiency in utilizing assets to produce sales after 2021.

Return on Assets (ROA)

ROA exhibits a strong decline from 27.78% in 2020 to 1.26% in 2023, with a modest recovery to 2.37% in 2024. This trend aligns with the movement in net profit margin and asset turnover, indicating that overall asset profitability weakened considerably after 2021 and has only started to improve slightly by the end of the period.

In summary, the company experienced a period of strong profitability and asset efficiency in the early years, followed by significant erosion in these financial metrics starting in 2022. Despite some improvement in 2024, the ratios remain well below early period levels, highlighting challenges in maintaining profit margins and asset utilization efficiency over recent years.

Tax Burden

The tax burden demonstrates considerable fluctuations over the five-year period. It starts relatively high at 1.95 in 2020, declines sharply to 0.86 in 2021, then rises modestly to 1.1 in 2022. A significant increase is observed in 2023, reaching 1.68, before dropping again to 0.81 in 2024. This variability indicates inconsistent tax expenses relative to earnings before taxes during the period.

Interest Burden

The interest burden remains relatively stable, fluctuating within a narrow range from 0.83 to 0.99. It peaks at 0.99 in 2021, dips to a low of 0.83 in 2023, and returns to 0.96 in 2024. This trend suggests that interest expenses as a proportion of earnings before interest and taxes have been managed with minor variations.

EBIT Margin

The EBIT margin exhibits a downward trend with notable volatility. It starts at 13.59% in 2020, increases significantly to 22.57% in 2021, but then declines steeply to 5.45% in 2022 and further to 2.71% in 2023. In 2024, there is a partial recovery to 8.2%. This pattern indicates a decrease in operational profitability after 2021, with some improvement toward the end of the period.

Asset Turnover

Asset turnover declines sharply from 1.09 in 2020 to 1.32 in 2021 (notably an increase), followed by a steep drop in 2022 to 0.35, remaining relatively flat in 2023 (0.33) and increasing slightly to 0.37 in 2024. The significant drop after 2021 suggests a reduced efficiency in generating sales from assets, which slightly ameliorates by the end of the period.

Return on Assets (ROA)

Return on assets shows a decreasing trend with high volatility. It starts at 27.78% in 2020, marginally declines to 25.46% in 2021, then sharply falls to 1.95% in 2022 and further decreases to 1.26% in 2023. In 2024, a modest increase to 2.37% is observed. This indicates that the company’s effectiveness in generating profits from its assets has been severely diminished following 2021, with minimal recovery thereafter.

Tax Burden

The tax burden ratio exhibits considerable fluctuations over the observed periods. Starting at 1.95 in 2020, it significantly declined to 0.86 in 2021, then increased slightly to 1.1 in 2022. In 2023, it rose again to 1.68 before dropping back to 0.81 in 2024. This irregular pattern indicates variability in tax expenses relative to pre-tax income, reflecting possible changes in tax policies, profitability before taxes, or unusual tax events during the years.

Interest Burden

The interest burden ratio shows moderate variation but remains relatively close to 1 throughout the periods, starting at 0.96 in 2020 and ending at 0.96 in 2024. It peaked at 0.99 in 2021 and dipped to its lowest at 0.83 in 2023. The general trend indicates a relatively stable capacity to cover interest expenses from operating income, with a slight weakening in 2023 before recovering in 2024.

EBIT Margin

The EBIT margin displays a declining trend overall, with notable volatility. The margin was relatively strong at 13.59% in 2020 and peaked at 22.57% in 2021. Following this peak, there was a sharp decline to 5.45% in 2022, with further reductions in 2023 to 2.71%. A partial recovery is apparent in 2024, increasing to 8.2%. This pattern suggests pressures on operating profitability after 2021, although some improvement occurred by the end of the latest period.

Net Profit Margin

The net profit margin reflects a similar volatility and overall downward trajectory, starting at a high 25.5% in 2020, then declining to 19.24% in 2021. There was a steep drop in 2022 to 5.59%, followed by a further decrease to 3.77% in 2023. In 2024, the margin improved slightly to 6.36%. This indicates challenges in translating revenue into net income during the middle periods, with some recovery noted at the end, albeit remaining well below earlier levels.