Applied Materials Inc. (NASDAQ:AMAT)

The analysis of the financial ratios over the six-year period reveals several key trends in asset utilization and efficiency.

Net Fixed Asset Turnover

This ratio shows an overall declining trend after peaking in 2021 at 11.93. From 2019 to 2021, the ratio increased steadily from 9.55 to 11.93, indicating improved efficiency in generating sales from fixed assets. However, after 2021, it declined notably to 11.18 in 2022 and further down to 9.37 in 2023, reaching 8.14 by 2024. This suggests a reduction in fixed asset productivity in the more recent years.

Net Fixed Asset Turnover (including operating lease, right-of-use asset)

This adjusted ratio follows a similar pattern but at lower levels, reflecting the inclusion of leased assets. It remained relatively stable between 2019 and 2021, fluctuating modestly around 9.27 to 10.35. Post-2021, the ratio declined more sharply, from 9.56 in 2022 down to 7.32 by 2024. The consistent gap between this measure and the standard net fixed asset turnover indicates the impact leases have on asset base considerations and associated turnover rates.

Total Asset Turnover

Reflecting overall asset efficiency, this ratio remained stable at 0.77 in both 2019 and 2020, then improved to a peak of 0.96 in 2022, demonstrating better total asset utilization. However, it declined afterward to 0.86 in 2023 and further to 0.79 in 2024. Despite the recent decline, the turnover in 2024 is only slightly above the initial levels observed at the beginning of the period examined.

Equity Turnover

The equity turnover ratio showed a rise from 1.78 in 2019 to a peak of 2.11 in 2022, suggesting more efficient use of equity to generate revenue during this interval. Nevertheless, this ratio experienced a sharp decline in the following years, dropping to 1.62 in 2023 and further down to 1.43 in 2024, indicating decreased equity efficiency in the recent periods.

Overall, the data indicates a period of increasing efficiency and asset utilization culminating around 2021–2022, followed by a decline across all measured turnover ratios. This downward trend suggests potential challenges in maintaining asset productivity and efficient use of equity in the later years, which may warrant further investigation into operational or market factors impacting performance.

The financial data over the analyzed periods reveals several key trends in revenue generation, asset investment, and efficiency metrics.

Net Revenue

There is a consistent upward trend in net revenue from 2019 through 2024. Starting at US$14,608 million in 2019, revenue increased steadily each year, reaching US$27,176 million in 2024. This represents an overall growth of approximately 86% over the six-year period, indicating strong top-line expansion.

Property, Plant and Equipment (PP&E), net

The investment in fixed assets, including finance lease right-of-use assets, shows a marked increase throughout the period under review. Beginning at US$1,529 million in 2019, the net PP&E balance grew consistently to US$3,339 million by 2024. This more than doubling of net fixed assets suggests significant capital expenditure and expansion efforts on physical assets.

Net Fixed Asset Turnover

The ratio of net revenue to net fixed assets, net fixed asset turnover, exhibits a declining trend in recent years after an initial increase. The ratio increased from 9.55 in 2019 to a peak of 11.93 in 2021, indicating improved efficiency in utilizing fixed assets to generate revenue. However, from 2022 onwards, this ratio decreased to 8.14 in 2024, reflecting that revenue growth has not kept pace with the accelerated increase in fixed asset investment.

In summary, the entity has experienced robust revenue growth alongside substantial increases in fixed asset investments. While asset utilization efficiency improved initially, recent declines in fixed asset turnover suggest that the expansion in assets is growing faster than revenue generation, possibly indicating a phase of capital spending aimed at supporting future growth rather than immediate revenue increases.

The financial data reveals several significant trends over the examined periods, reflecting changes in operational scale and asset utilization efficiency.

Net Revenue

Net revenue has shown a consistent upward trajectory from 2019 through 2024. Starting at $14,608 million in 2019, revenues increased steadily each year, reaching $27,176 million in 2024. This growth suggests ongoing expansion in sales or service delivery, with the most substantial increase occurring between 2020 and 2021, where revenue jumped by approximately 34%.

Property, Plant, and Equipment (PP&E), Net

The net value of property, plant, and equipment, including finance lease right-of-use assets, has also increased substantially, rising from $1,529 million in 2019 to $3,714 million in 2024. This more than doubling of net fixed assets indicates significant investment in physical capital over the period, potentially to support growth in operations or capacity expansion.

Net Fixed Asset Turnover

Despite the increases in both net revenue and net fixed assets, the net fixed asset turnover ratio has exhibited a declining trend. The ratio decreased from 9.55 in 2019 to 7.32 in 2024. This decline implies that the company is generating less revenue per dollar of fixed assets over time, which could suggest diminishing efficiency in asset utilization or that asset additions are outpacing revenue growth. Notably, the turnover peaked in 2021 at 10.35 before commencing a downward trajectory.

In summary, while there is clear revenue growth and heavier investment in fixed assets, the declining asset turnover ratio suggests a need to assess the return on these investments to ensure that asset utilization remains efficient as the company expands.

The financial data reveals several notable trends over the covered time periods. Net revenue exhibited consistent growth from 2019 through 2024, increasing from $14,608 million to $27,176 million. This steady rise indicates the company's expanding sales or operational scale in the market.

Total assets also demonstrated a continuous upward trajectory, starting at $19,024 million in 2019 and reaching $34,409 million in 2024. This suggests substantial asset accumulation potentially tied to investments, acquisitions, or capital expenditures supporting business growth.

In contrast to the positive revenue and asset growth, the total asset turnover ratio exhibited a fluctuating pattern. Initially stable at 0.77 in 2019 and 2020, it then improved to a peak of 0.96 in 2022, indicating increased efficiency in utilizing assets to generate revenue during that period. However, the ratio declined thereafter to 0.79 in 2024, reflecting a reduction in asset utilization efficiency despite ongoing asset base expansion.

Overall, while revenue growth and asset accumulation suggest business expansion, the declining asset turnover ratio in recent years may indicate challenges in maintaining asset productivity. This trend warrants further investigation to understand underlying causes such as operational inefficiencies, asset underutilization, or changes in asset composition.

Net Revenue

Consistent increase from $14,608 million in 2019 to $27,176 million in 2024, reflecting sustained business growth.

Total Assets

Steady growth over the period, rising from $19,024 million to $34,409 million, indicating significant asset investments.

Total Asset Turnover

Stable at 0.77 initially, peaked at 0.96 in 2022, then declined to 0.79 in 2024, showing fluctuating efficiency in asset utilization.

The analysis of the financial data over the six-year period indicates several notable trends and developments.

Net Revenue

Net revenue shows a consistent upward trajectory throughout the period analyzed. Starting from 14,608 million US dollars in 2019, it increased steadily each year, reaching 27,176 million US dollars by 2024. This represents an overall growth of approximately 86% over the six years, with particularly strong growth observed in the years 2020 to 2022.

Stockholders’ Equity

Stockholders' equity also exhibits a rising trend, growing from 8,214 million US dollars in 2019 to 19,001 million US dollars in 2024. This more than doubling of equity indicates strong value accumulation and possibly retained earnings or capital increases. A significant jump is evident between 2022 and 2023, where equity increased sharply by over 3,000 million US dollars, followed by continued growth in 2024.

Equity Turnover

The equity turnover ratio exhibits more variability compared to revenue and equity. Starting at 1.78 in 2019, it decreased to 1.63 in 2020 but then rose to a peak of 2.11 in 2022 before declining again in the subsequent years, ending at 1.43 in 2024. The peak in 2022 suggests a period when the company generated higher revenue relative to its equity base. However, the decline in the last two years may indicate that revenue growth has not kept pace with the increase in equity, reducing the efficiency of equity in generating revenue.

Overall, the data reveals a company with steadily increasing revenue and equity, although the efficiency of equity utilization to generate revenue has fluctuated and recently declined. The growth in equity outpacing the increase in revenue in recent years might suggest a strategic emphasis on strengthening the balance sheet or preparing for future investments.