Applied Materials Inc. (NASDAQ:AMAT)

Total Assets

The reported total assets have shown a consistent upward trend over the six-year period, increasing from $19,024 million in 2019 to $34,409 million in 2024. This represents a substantial growth, indicating asset expansion. Similarly, the adjusted total assets, which exclude goodwill, have also increased steadily from $15,625 million in 2019 to $30,677 million in 2024. Although adjusted assets are lower than reported assets due to goodwill exclusion, both metrics follow similar growth trajectories, reflecting overall asset accumulation and balance sheet strengthening.

Stockholders' Equity

Reported stockholders’ equity increased markedly from $8,214 million in 2019 to $19,001 million in 2024. The growth has been fairly consistent, with the most significant increases observable between 2022 and 2024. Adjusted stockholders’ equity, which removes goodwill, also shows an upward trend, rising from $4,815 million in 2019 to $15,269 million in 2024. The adjusted equity remains significantly below the reported figures, underscoring the substantial impact of goodwill on equity values. However, the consistent rise in adjusted equity suggests genuine growth in equity excluding intangible assets.

Comparative Insights

The difference between reported and adjusted values indicates the presence and impact of goodwill on the balance sheet. Over the period, the gap between reported and adjusted figures grows, which may suggest increasing acquisitions or other factors leading to higher goodwill. Despite this, the company shows robust growth in both tangible assets and equity, demonstrating financial expansion and potentially enhanced market positioning. The steady increases in adjusted equity and assets affirm improving underlying financial health, independent of goodwill valuation.

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

Total Asset Turnover

Both reported and adjusted total asset turnover ratios demonstrate an overall increasing trend from 2019 through 2022, indicating improving efficiency in utilizing assets to generate sales. The reported ratio rose from 0.77 in 2019 to a peak of 0.96 in 2022 before declining to 0.79 in 2024. Similarly, the adjusted ratio increased from 0.93 in 2019 to 1.12 in 2022, then dropped to 0.89 in 2024. The adjusted figures consistently exceed the reported ratios, suggesting that goodwill adjustments provide a more favorable view of asset utilization.

Financial Leverage

Financial leverage ratios display a decreasing trend, indicating a reduction in reliance on debt or other financial obligations over time. Reported leverage decreased from 2.32 in 2019 to 1.81 in 2024. The adjusted leverage ratios also declined, from a notably higher 3.25 in 2019 to 2.01 in 2024. The adjusted values remain above reported ones, reflecting the impact of goodwill on the equity base used to calculate leverage. This downward trend suggests a strategy geared toward lower financial risk or changes in capital structure.

Return on Equity (ROE)

ROE demonstrates significant volatility but maintains an overall high level. Reported ROE increased from 32.94% in 2019 to a peak of 53.51% in 2022 before declining to 37.77% in 2024. Adjusted ROE follows a similar pattern with higher values, ranging from 56.2% in 2019 to a peak of 76.82% in 2022, then decreasing to 47.0% in 2024. The adjusted ROE being substantially higher than the reported ROE indicates that goodwill adjustments enhance perceived profitability relative to equity, perhaps by reducing equity through goodwill deductions.

Return on Assets (ROA)

ROA also shows growth through 2022 followed by a decline in subsequent years. The reported ROA improved from 14.22% in 2019 to 24.41% in 2022 and then decreased to 20.86% in 2024. Adjusted ROA trends similarly but with consistently higher values, from 17.32% in 2019 to 28.34% in 2022, then down to 23.4% in 2024. This pattern suggests improving asset profitability until the 2022 peak, with a modest decrease afterward. The adjustments for goodwill increase the apparent efficiency of asset use.

Overall, the data suggests that the company experienced improved operational efficiency and profitability up to 2022, coinciding with higher asset turnover and returns. However, the subsequent decline in asset turnover, ROE, and ROA in 2023 and 2024 indicates a recent softening of performance. The consistent difference between reported and adjusted figures highlights the significant impact of goodwill adjustments on understanding financial health, particularly regarding asset utilization and returns.

The analysis of the financial data reveals a consistent increase in both reported and adjusted total assets over the six-year period. Reported total assets rose from 19,024 million US dollars in 2019 to 34,409 million US dollars in 2024, representing an overall growth trend. Similarly, adjusted total assets, which exclude goodwill and other intangible asset adjustments, also increased steadily from 15,625 million US dollars in 2019 to 30,677 million US dollars in 2024. This indicates substantial asset growth regardless of the adjustments for goodwill.

When examining asset turnover ratios, which measure how efficiently the company uses its assets to generate revenue, different trends can be observed between the reported and adjusted figures. The reported total asset turnover ratio remained stable at 0.77 for the first two years, then increased to a peak of 0.96 in 2022 before declining to 0.79 by 2024. This fluctuation suggests a variance in the efficiency of utilizing assets to produce revenue during the period, with a recent decrease in efficiency.

In contrast, the adjusted total asset turnover ratio started higher at 0.93 in 2019 and showed an improving trend until reaching a peak of 1.12 in 2022. Thereafter, a decline occurred, dropping to 0.89 by 2024. Despite this decrease, the adjusted turnover ratios remained consistently above the reported ratios throughout the period, indicating that after excluding goodwill, the company appears more efficient in asset utilization.

Total Assets

Both reported and adjusted total assets increased steadily, with reported assets growing by approximately 81% from 2019 to 2024 and adjusted assets growing by about 96% over the same span. This growth suggests ongoing investment and expansion in asset base.

Asset Turnover Ratios

Reported asset turnover showed initial stability, a peak in 2022, followed by a decline by 2024, signaling possible challenges in maintaining asset efficiency relative to revenue generation. Adjusted asset turnover ratios followed a similar trend but consistently indicated higher efficiency.

Insights

The higher adjusted asset turnover ratios imply that goodwill adjustments have a notable impact on the apparent efficiency of asset use. The decline in turnover ratios in the last two years may warrant further investigation into operational performance or market conditions affecting revenue relative to asset growth.

The analysis reveals consistent growth across key financial metrics over the observed periods, accompanied by notable differences between reported and goodwill-adjusted figures.

Total Assets

The reported total assets increased steadily from US$19.0 billion in 2019 to US$34.4 billion in 2024, indicating a compound growth trend. Similarly, the goodwill-adjusted total assets followed the same upward trajectory, growing from US$15.6 billion to US$30.7 billion over the same period. This consistent increase reflects ongoing asset accumulation or acquisition activity, with the adjusted figures persistently lower due to the exclusion of goodwill.

Stockholders’ Equity

Reported stockholders’ equity exhibited a marked increase from approximately US$8.2 billion in 2019 to US$19.0 billion in 2024, nearly doubling within five years. The goodwill-adjusted equity, while lower throughout, also showed a strong upward trend from US$4.8 billion to US$15.3 billion, reflecting growth in net assets excluding goodwill. The widening gap between reported and adjusted equity suggests increasing goodwill on the balance sheet over time.

Financial Leverage

Reported financial leverage declined from 2.32 in 2019 to 1.81 in 2024, indicating a gradual reduction in the ratio of total assets to equity and suggesting a strengthening equity base relative to assets. In contrast, the goodwill-adjusted financial leverage was consistently higher but showed a similar downward trend, decreasing from 3.25 to 2.01 over the period. This indicates that even after excluding goodwill, the company improved its leverage position, reducing financial risk and potentially increasing solvency over time.

Overall, the data demonstrates a robust expansion in asset base and equity, alongside improved leverage ratios, indicating strengthened financial stability. The divergence between reported and adjusted metrics points to significant goodwill balances impacting reported equity and asset totals, which should be considered in evaluating the company's underlying financial health.

The financial data indicates a consistent increase in reported stockholders’ equity from October 2019 through October 2024, rising from 8,214 million US dollars to 19,001 million US dollars. This growth suggests an expansion in the company's net asset base over the six-year period. Adjusted stockholders’ equity, which accounts for goodwill adjustments, follows a similar upward trend, increasing from 4,815 million US dollars in 2019 to 15,269 million US dollars in 2024. Despite the overall growth, the reported equity values are consistently higher than the adjusted figures, reflecting the impact of goodwill on the company's accounting equity.

Regarding the return on equity (ROE), both reported and adjusted metrics demonstrate significant volatility while maintaining generally high levels. Reported ROE escalated from 32.94% in 2019 to a peak of 53.51% in 2022, before declining to 37.77% in 2024. Adjusted ROE exhibits a similar pattern but with higher percentages, starting at 56.2% in 2019, peaking at 76.82% in 2022, and then decreasing to 47.0% in 2024. The higher adjusted ROE values compared to reported ROE suggest that excluding goodwill leads to a smaller equity base, thereby amplifying the return metrics.

The peak in both reported and adjusted ROE around 2022 indicates a period of enhanced profitability or efficient equity utilization, which diminishes somewhat in subsequent years. The decline in ROE post-2022, despite continued growth in equity, implies either a relative reduction in net income or increased equity that outpaces net income growth. Overall, the trends reveal robust equity growth coupled with fluctuating but generally strong returns, with adjustments for goodwill providing a more conservative and arguably more precise measure of equity and profitability performance.

The data exhibits a clear upward trend in total assets over the six-year period, both on a reported basis and when adjusted for goodwill. Reported total assets increased from $19,024 million in 2019 to $34,409 million in 2024, denoting significant expansion. Similarly, goodwill-adjusted assets rose from $15,625 million to $30,677 million over the same period, indicating that the company’s tangible investment base grew robustly even when excluding intangible goodwill components.

Regarding profitability, the reported Return on Assets (ROA) demonstrates an overall increasing trend from 14.22% in 2019, peaking at 24.41% in 2022, before declining slightly to 20.86% in 2024. The goodwill-adjusted ROA follows a similar pattern but at higher levels: starting from 17.32% in 2019, reaching a high of 28.34% in 2022, then tapering off to 23.4% in 2024. This consistently superior adjusted ROA suggests a more efficient use of tangible assets compared to the reported basis, which incorporates goodwill.

Asset Base Trends

Total assets grew by approximately 81% on a reported basis and by about 96% on a goodwill-adjusted basis over six years, reflecting a sustained investment and growth strategy.

Profitability Metrics

Both reported and adjusted ROA improved markedly from 2019 through 2022, indicating enhanced operational efficiency. The subsequent slight decline from 2022 to 2024 may reflect rising asset values, margin compression, or shifting business conditions.

Goodwill Adjustment Impact

The adjusted figures provide a clearer picture of returns generated from core assets, consistently outperforming reported figures. This underscores the importance of considering asset quality in assessing the company’s profitability.

Overall, the company has successfully expanded its asset base while improving asset returns until 2022, with a mild ROA correction thereafter. The difference between reported and adjusted measures highlights the effect of goodwill on financial metrics and suggests continued strength in operational efficiency when excluding intangible asset valuation.