Analog Devices Inc. (NASDAQ:ADI)

Return on Assets (ROA)

ROA exhibited some fluctuations over the observed periods. Starting at 5.69% in 2020, it decreased sharply to 2.66% in 2021, then rebounded to 5.46% in 2022. The upward trend continued into 2023, reaching a peak of 6.79%, before declining again to 3.39% in 2024. The figure improved once more in 2025 to 4.72%, indicating variability but a general tendency to recover after downturns.

Financial Leverage

Financial leverage showed relative stability throughout the timeline. Beginning at 1.79 in 2020, it decreased significantly to 1.38 in 2021 and remained steady at approximately 1.37 for the next three years (2022 to 2024). A slight increase was observed in 2025, rising to 1.42. This stability suggests a consistent capital structure with limited reliance on debt financing variations.

Return on Equity (ROE)

ROE displayed a trend similar to ROA, with notable fluctuations. Starting at 10.17% in 2020, it fell to 3.66% in 2021, followed by an increase to 7.54% in 2022. It further rose to 9.32% in 2023 before decreasing to 4.65% in 2024. In 2025, ROE improved moderately to 6.7%. This pattern indicates periods of reduced profitability followed by recovery phases, mirroring the asset returns trend but with generally higher values due to leverage effects.

The analysis of the annual financial ratios over the observed periods reveals several notable trends and variations in profitability, efficiency, leverage, and overall return on equity.

Net Profit Margin

The net profit margin exhibited fluctuations throughout the periods. After starting at a high level of 21.79% in 2020, it experienced a decline to 19.0% in 2021. The margin then increased, peaking at 26.94% in 2023, before declining again to 17.35% in 2024. In the most recent period, the margin showed a partial recovery to 20.58%. This pattern indicates periods of both strong profitability and challenges, suggesting variability in cost control or pricing power over time.

Asset Turnover

The asset turnover ratio demonstrates moderate fluctuations, indicating changes in asset utilization efficiency. Starting at 0.26 in 2020, the ratio dropped sharply to 0.14 in 2021, pointing to reduced asset efficiency during that year. It then recovered to around 0.24-0.25 for two years before decreasing again to 0.20 in 2024 and slightly improving to 0.23 in 2025. These variations suggest periodic adjustments in the company's operational efficiency or asset base relative to sales.

Financial Leverage

Financial leverage has decreased from 1.79 in 2020 to around 1.38 during 2021 to 2024, indicating a reduction in the use of debt financing or changes in the capital structure. A slight uptick to 1.42 in 2025 may suggest a modest increase in leveraging. Overall, the company maintained a relatively stable leverage level in the latter years, reflecting a conservative approach to financial risk.

Return on Equity (ROE)

Return on equity shows notable volatility, beginning at 10.17% in 2020, then dropping sharply to 3.66% in 2021. It partially recovered to 7.54% and 9.32% in subsequent years but declined again to 4.65% in 2024, followed by a modest rise to 6.7% in 2025. The ROE movements correspond with changes in net profit margin and asset turnover, underlying the impact of operating performance and financial structure on shareholder returns.

In summary, the company's profitability and efficiency metrics have experienced significant fluctuations, with net profit margin and ROE showing considerable volatility. Asset turnover reflects shifts in operational efficiency, while financial leverage remains relatively stable with a slight downward trend followed by a mild increase. These patterns imply that the company has navigated a variable operating environment with periodic adjustments in profitability, efficiency, and capital structure management.

Tax Burden

The tax burden ratio showed some fluctuations over the periods analyzed. Starting at 0.93, it increased to a peak of 1.05 in the following year, then decreased to 0.89 and stabilized around 0.92 in subsequent years before declining to 0.84. Overall, there is a slight downward trend in the tax burden towards the later periods.

Interest Burden

The interest burden ratio remained relatively stable, with values fluctuating slightly between 0.85 and 0.94. The ratio peaked at 0.94 before declining to 0.85 and then rising again to 0.9 in the most recent period. This indicates modest variability in interest expense relative to operating income.

EBIT Margin

The EBIT margin exhibited significant variation, initially starting at 26.86%, decreasing to 20.68% in the following year, then recovering strongly to 31.47% before dropping again to 22.27% and increasing to 27.49%. This pattern suggests volatility in operating profitability, with periods of both expansion and contraction in the EBIT margin.

Asset Turnover

Asset turnover experienced a decline from 0.26 to 0.14, followed by a partial recovery to 0.25. Subsequently, it showed a slight decrease again, ending at 0.23. The trend indicates difficulties in consistently generating sales from assets, with some improvements after an initial decrease but no sustained growth.

Financial Leverage

Financial leverage decreased noticeably from 1.79 to around 1.38 and remained stable near this level for several years before a slight increase to 1.42 in the final period. This suggests a strategic reduction in leverage followed by a modest rise, indicating a cautious approach to the use of debt financing.

Return on Equity (ROE)

The return on equity showed significant volatility, starting at 10.17% and dropping sharply to 3.66%, then partially recovering to 9.32%. It declined again to 4.65% and finally rose to 6.7%. Overall, ROE demonstrates an unstable pattern with periods of reduced profitability, reflecting variations in both operating performance and financial structure.

Net Profit Margin

Over the observed period, the net profit margin exhibited noticeable fluctuations. It initially decreased from 21.79% to 19% between 2020 and 2021, then increased to a peak of 26.94% in 2023. However, subsequent years saw a decline to 17.35% in 2024, followed by a moderate recovery to 20.58% in 2025. This pattern indicates variable profitability, with a significant peak in 2023 but lower margins in the most recent years.

Asset Turnover

Asset turnover displayed considerable variability throughout the timeframe. It dropped sharply from 0.26 in 2020 to 0.14 in 2021, then rebounded to around 0.24-0.25 in 2022 and 2023. A decline to 0.20 occurred in 2024, followed by partial recovery to 0.23 in 2025. This suggests fluctuations in efficiency with which assets generate revenue, showing periods of reduced and improved utilization.

Return on Assets (ROA)

Return on assets mirrored the trends seen in net profit margin and asset turnover, demonstrating volatility. The ROA decreased sharply from 5.69% in 2020 to 2.66% in 2021, increased to a high of 6.79% in 2023, and then experienced a decline again to 3.39% in 2024. A slight improvement was observed in 2025, reaching 4.72%. This reflects changing profitability relative to the company's asset base, influenced by both margin and asset efficiency dynamics.

The analysis of the annual financial ratios reveals several key trends over the examined periods.

Tax Burden

The tax burden ratio fluctuated during the years, starting at 0.93 and peaking above 1.05 in the second year before generally declining to 0.84 by the final year. This pattern suggests variability in the effective tax rate impacting earnings after tax, with a notable decrease towards the end of the period, potentially indicating improved tax efficiency or changes in tax regulations or net income structure.

Interest Burden

The interest burden ratio remained relatively stable within a narrow range between 0.85 and 0.94 across the years. Minor fluctuations indicate consistent interest expense relative to operating income, with a slight dip in the fifth year and an increase in the last year. This reflects a stable cost of debt or interest expenses burden.

EBIT Margin

There was a notable variability in EBIT margin, with a low of approximately 20.68% and a peak over 31%. The margin decreased significantly after the initial year but rebounded strongly in the third and fourth periods before declining again in subsequent years. This variability suggests changes in operating profitability, which could be influenced by shifts in revenue, cost management, or operational efficiency.

Asset Turnover

Asset turnover ratio showed a decline in the second year to 0.14, followed by a recovery and relative stabilization around 0.20-0.26 in the later years. Lower asset turnover in certain years indicates less efficient use of assets to generate sales, while the recovery suggests improvement in asset utilization or changes in asset base or sales volume.

Return on Assets (ROA)

ROA exhibited a pattern similar to EBIT margin and asset turnover, with an initial value of 5.69%, dropping to a low of 2.66%, then rising to near 6.79% before decreasing again towards the end of the period. This reflects overall asset profitability trends, influenced by operating income margins and asset utilization efficiency. The fluctuations highlight variations in how effectively assets generate net income over time.

Overall, the data shows volatility in key profitability and efficiency ratios, suggesting periods of operational and financial shifts affecting performance evaluation. While some ratios indicate improvements in certain years, the inconsistency points to challenges in maintaining stable growth or efficiency.

Tax Burden

The tax burden ratio exhibits variability over the observed periods, initially increasing from 0.93 to a peak of 1.05, followed by a decline to 0.89 and relative stabilization around 0.92 before decreasing further to 0.84 in the latest period. This pattern suggests fluctuations in effective tax rates or tax-related factors impacting net income.

Interest Burden

The interest burden ratio remains relatively stable with minor fluctuations, staying within a range of 0.85 to 0.94. This indicates a generally consistent level of interest expenses relative to operating income, though a slight improvement is noted in some periods.

EBIT Margin

The EBIT margin displays notable fluctuations across the periods, with an initial decline from 26.86% to 20.68%, followed by a significant increase reaching 31.47%. Subsequently, it decreases to 22.27% before rising again to 27.49%. These changes indicate variability in operating profitability, reflecting factors such as operational efficiency, cost management, and revenue changes.

Net Profit Margin

The net profit margin follows a similar pattern to the EBIT margin but with generally lower values, ranging from 17.35% to 26.94%. After an initial decline from 21.79% to 19%, profitability improves to 26.94%, then declines again to 17.35%, and slightly recovers to 20.58%. This trend aligns with the movement in EBIT margin and tax burden, emphasizing the interplay between operating performance, tax effects, and interest expenses in determining final profitability.