Biogen Inc. (NASDAQ:BIIB)

Return on Assets (ROA)

The Return on Assets exhibited an upward trend from 10.73% in 2017 to a peak of 21.62% in 2019, indicating increasing efficiency in asset utilization during this period. However, a decline followed, with ROA falling to 16.25% in 2020 and further dropping to 6.52% in 2021. This suggests a diminishing ability to generate profit from assets in the most recent years.

Financial Leverage

Financial leverage showed a gradual increase from 1.88 in 2017 to 2.3 in 2020, reflecting a rising use of debt or liabilities relative to equity over time. In 2021, there was a slight reduction to 2.19, which may indicate a modest shift toward lower reliance on leverage compared to the previous year.

Return on Equity (ROE)

Return on Equity followed a similar pattern to ROA, increasing significantly from 20.13% in 2017 to a high of 44.13% in 2019. Afterward, ROE declined to 37.39% in 2020 and experienced a notable decrease to 14.28% in 2021. This decline suggests a reduction in profitability for shareholders in recent years despite prior strong gains.

Additional Insights

The combination of rising financial leverage up to 2020 and increasing ROE and ROA during the same period suggests that the company effectively used leverage to enhance returns initially. However, the subsequent declines in profitability ratios alongside a slight reduction in leverage may indicate challenges in maintaining operational efficiency or profitability as financial risks remained elevated. The sharp decline in both ROA and ROE in 2021 warrants attention as it may point to operational difficulties, increased costs, or other market factors affecting overall financial performance.

Net Profit Margin

The net profit margin showed an increasing trend from 20.69% in 2017 to a peak of 40.96% in 2019, indicating improved profitability efficiency over these years. However, it declined significantly thereafter, reaching 29.76% in 2020 and continuing to decrease to 14.17% by 2021. This pattern suggests that profit retention relative to revenue deteriorated substantially in the final two periods analyzed.

Asset Turnover

The asset turnover ratio remained relatively stable from 2017 to 2020, fluctuating minimally between 0.52 and 0.55, demonstrating consistent efficiency in utilizing assets to generate revenue. In 2021, however, there was a noticeable decline to 0.46, indicating a reduced ability to generate sales from asset investments in the most recent year.

Financial Leverage

Financial leverage exhibited a gradual upward trend from 1.88 in 2017 to a peak of 2.3 in 2020, implying an increasing use of debt financing relative to equity. In 2021, financial leverage slightly decreased to 2.19, suggesting a modest reduction in the reliance on debt, though still elevated compared to earlier years.

Return on Equity (ROE)

The return on equity mirrored the trajectory of net profit margin, rising from 20.13% in 2017 to a high of 44.13% in 2019, which reflects strong overall profitability and effective equity utilization during this period. Subsequently, ROE declined sharply to 37.39% in 2020 and further dropped to 14.28% in 2021, indicating significantly weakened returns to shareholders in the latter years.

Tax Burden

The tax burden ratio exhibited a notable increasing trend over the observed period, rising from 0.51 in 2017 to 0.97 in 2021. This indicates a higher proportion of earnings retained after taxes each year, with a substantial jump especially between 2020 and 2021.

Interest Burden

The interest burden ratio remained relatively stable from 2017 to 2020, fluctuating slightly between 0.95 and 0.97. However, in 2021, this ratio decreased significantly to 0.86, suggesting an increased interest expense burden on earnings before taxes in that year.

EBIT Margin

The EBIT margin showed a strong upward trend from 42.76% in 2017, peaking at 50.31% in 2019. After 2019, there was a sharp decline to 38.79% in 2020, followed by a further reduction to 16.96% in 2021. This indicates a marked drop in operating profitability in the most recent years.

Asset Turnover

Asset turnover remained relatively constant around 0.52-0.55 from 2017 through 2020, reflecting stable efficiency in using assets to generate revenue. In 2021, a decrease to 0.46 occurred, indicating reduced asset utilization effectiveness.

Financial Leverage

The financial leverage ratio showed a steady increase from 1.88 in 2017 to a peak of 2.30 in 2020, implying growing reliance on debt financing. In 2021, there was a slight decline to 2.19, though leverage remains elevated compared to the earlier years.

Return on Equity (ROE)

The ROE increased substantially from 20.13% in 2017 to 44.13% in 2019, indicating strong profitability relative to shareholders' equity during this period. Subsequently, ROE declined to 37.39% in 2020 and then dropped sharply to 14.28% in 2021, signaling diminished returns to equity holders in recent years.

Net Profit Margin

The net profit margin demonstrates a fluctuating trend over the five-year period. It increased significantly from 20.69% in 2017 to peak at 40.96% in 2019. Subsequently, it declined sharply to 29.76% in 2020 and further dropped to 14.17% in 2021, indicating a substantial reduction in profitability relative to revenue in the most recent year.

Asset Turnover

Asset turnover remained relatively stable from 2017 through 2020, hovering around 0.52 to 0.55, showing consistent efficiency in using assets to generate sales. However, in 2021, this ratio decreased noticeably to 0.46, suggesting a reduction in asset utilization efficiency during that year.

Return on Assets (ROA)

The return on assets followed a similar pattern to net profit margin, with an upward trend from 10.73% in 2017 to a high of 21.62% in 2019. Thereafter, ROA declined sharply to 16.25% in 2020 and further dropped to 6.52% in 2021. This decline reflects a diminished ability to generate earnings from assets in the latter years, with 2021 showing significantly reduced asset profitability.

Tax Burden

The tax burden ratio demonstrated a consistent upward trend over the five-year period, increasing from 0.51 in 2017 to 0.97 by 2021. This indicates a progressively larger proportion of earnings being allocated to taxes, which could potentially impact net profitability.

Interest Burden

The interest burden ratio remained relatively stable, fluctuating slightly between 0.95 and 0.97 from 2017 through 2020, before decreasing to 0.86 in 2021. The decline in 2021 suggests higher interest expenses relative to earnings before interest and taxes, which may affect overall profit margins.

EBIT Margin

The EBIT margin increased from 42.76% in 2017 to peak at 50.31% in 2019, indicating strong operational efficiency during this period. However, there was a notable decline thereafter, dropping significantly to 38.79% in 2020 and further down to 16.96% in 2021. This decline points to a reduction in operating profitability, likely influenced by higher costs or reduced revenues.

Asset Turnover

Asset turnover remained relatively stable from 2017 to 2020, fluctuating between 0.52 and 0.55, suggesting consistent efficiency in utilizing assets to generate revenue. However, a decline to 0.46 in 2021 indicates reduced efficiency in asset use during the most recent year examined.

Return on Assets (ROA)

The return on assets followed a rising trajectory from 10.73% in 2017 to a high of 21.62% in 2019, reflecting improved overall asset profitability. Subsequently, ROA decreased markedly to 16.25% in 2020 and declined more sharply to 6.52% in 2021, paralleling the downturn observed in EBIT margin and indicating overall diminished profitability.

The financial data reveals notable trends in profitability and cost management over the five-year period.

Tax Burden

The tax burden ratio exhibited a general upward trend from 0.51 in 2017 to 0.97 in 2021, indicating an increasing proportion of earnings being allocated to taxes. This change suggests a higher effective tax rate or reduced tax benefits over the period, particularly with a marked increase between 2020 and 2021.

Interest Burden

The interest burden ratio remained relatively stable from 2017 to 2020, fluctuating narrowly between 0.95 and 0.97. However, there was a decline to 0.86 in 2021, which could imply higher interest expenses relative to earnings before interest and taxes in that final year.

EBIT Margin

Operating profitability as measured by EBIT margin showed an initial improvement, rising from 42.76% in 2017 to a peak of 50.31% in 2019. This was followed by a sharp decline to 38.79% in 2020 and a further significant drop to 16.96% in 2021. The contraction in EBIT margin in the last two years suggests pressure on operating efficiency or increased operating costs.

Net Profit Margin

Net profit margin trends mirrored those of EBIT margin but with greater volatility. The margin increased from 20.69% in 2017 to 40.96% in 2019, indicating strong overall profitability growth. Subsequently, net profit margin decreased to 29.76% in 2020 and further to 14.17% in 2021, signaling diminished bottom-line profitability possibly influenced by the rising tax and interest burdens and lower operating margins.

Overall, while profitability improved notably until 2019, the subsequent two years indicate a downturn characterized by increased tax and interest expenses and reduced operational profitability. This combination has resulted in a significant decline in net profit margin by the end of the period.