Biogen Inc. (NASDAQ:BIIB)

The analysis of the financial ratios over the five-year period reveals several distinctive trends in the company's operational efficiency and asset utilization.

Net fixed asset turnover

This ratio exhibited some variability, starting at 3.86 in 2017 and slightly decreasing to 3.74 in 2018. It then increased notably in 2019 to 4.43, indicating improved utilization of fixed assets to generate sales during that year. However, the ratio declined thereafter, falling to 3.94 in 2020 and further down to 3.21 by the end of 2021, suggesting a reduction in efficiency in using net fixed assets over the latter part of the period.

Net fixed asset turnover (including operating lease, right-of-use asset)

When including operating leases and right-of-use assets, a similar but somewhat more subdued pattern emerges. The ratio remained at 3.86 in 2017, identical to the traditional measure, but the 2019 peak was lower at 3.91 compared to 4.43. The decline continued more markedly through 2020 and 2021, reaching a level of 2.9, which reflects the impact of incorporating lease assets on asset utilization metrics. This suggests that while traditional fixed asset utilization decreased, the expanded asset base including leases showed an even steeper drop in turnover.

Total asset turnover

This ratio was relatively stable initially, holding around 0.52-0.53 from 2017 through 2019. It experienced a slight improvement to 0.55 in 2020, indicating a modest increase in sales generation relative to total assets. However, the ratio reversed direction in 2021, declining to 0.46. This decline signals a decrease in overall efficiency in utilizing all assets to produce revenue towards the end of the period.

Equity turnover

The equity turnover ratio shows a generally positive trend from 2017 through 2020, rising from 0.97 to a peak of 1.26. This suggests that the company was increasingly efficient in generating sales from its equity base during these years. However, the ratio fell back to 1.01 in 2021, indicating a reduction in this efficiency, though remaining slightly above the initial 2017 level.

In summary, asset utilization ratios experienced an overall decline after peaking around 2019 or 2020, reflecting decreasing operational efficiency. While equity turnover improved substantially until 2020, a notable decline in 2021 points to lower effectiveness in leveraging equity for sales. These trends may deserve closer examination to understand underlying causes such as changes in asset base composition, capital investments, or sales performance dynamics.

Revenue Trend

Revenue experienced an overall growth from 2017 to 2019, increasing from approximately $12.27 billion to $14.38 billion. However, this upward trend was interrupted in 2020, when revenue declined to around $13.44 billion, and the downward trend continued more sharply in 2021, with revenue falling to approximately $10.98 billion.

Property, Plant, and Equipment, Net

This asset category showed a generally stable to slightly increasing pattern over the five-year period. Starting at about $3.18 billion in 2017, it rose to $3.60 billion in 2018, then saw a decline in 2019 to roughly $3.25 billion. It rebounded slightly in 2020 and remained almost constant through 2021 at around $3.42 billion.

Net Fixed Asset Turnover Ratio

The net fixed asset turnover ratio started at 3.86 in 2017, reflecting relatively efficient utilization of fixed assets to generate revenue. This ratio decreased marginally in 2018 to 3.74 but improved notably in 2019 to 4.43, indicating higher efficiency during that year. However, in 2020 the ratio dropped to 3.94 and further declined to 3.21 in 2021, suggesting a decreasing efficiency of fixed asset use over the last two years of the period analyzed.

Overall Insights

Despite initial revenue growth from 2017 to 2019, the subsequent decline through 2021 indicates challenges impacting top-line performance. Although the property, plant, and equipment base remained relatively stable with a slight increase, the decreased turnover ratio in recent years reveals diminished efficiency in using these assets to generate revenue. This combination suggests possible underutilization of fixed assets or increased operational challenges translating asset investment into sales.

Revenue Trend

The revenue showed an initial upward trend from 12,273,900 thousand US dollars in 2017 to a peak of 14,377,900 thousand US dollars in 2019. Following this peak, revenue declined to 13,444,600 thousand US dollars in 2020 and further decreased to 10,981,700 thousand US dollars in 2021. This indicates a significant reduction in revenue during the last two reported years.

Property, Plant and Equipment (PP&E) Trend

The net value of property, plant, and equipment, inclusive of operating lease right-of-use assets, demonstrated consistent growth from 3,182,400 thousand US dollars in 2017 to 3,844,800 thousand US dollars in 2020. However, there was a slight decrease in 2021 to 3,791,800 thousand US dollars, suggesting a stabilization or modest reduction in the asset base after several years of growth.

Net Fixed Asset Turnover Ratio

The net fixed asset turnover ratio, which measures revenue generated per unit of fixed assets, declined from 3.86 in 2017 to 2.90 in 2021. Although there was some fluctuation, with a mild increase to 3.91 in 2019, the overall trend is downward. This indicates decreasing efficiency in the use of fixed assets to generate revenue over the period.

Overall Insights

The data reflects a growing investment in fixed assets until 2020, accompanied by increasing revenue up to 2019. However, in the subsequent years, revenue fell sharply while the asset base remained relatively stable, resulting in decreased asset turnover efficiency. This pattern could suggest challenges in translating asset investments into revenue generation during the later periods, possibly reflecting operational or market difficulties.

The financial data shows a detailed progression of revenue, total assets, and total asset turnover for the company over a five-year period from 2017 to 2021.

Revenue

Revenue increased steadily from 12,273.9 million USD in 2017 to a peak of 14,377.9 million USD in 2019, reflecting a growth trend during the first three years. However, in 2020 revenue decreased slightly to 13,444.6 million USD, followed by a more pronounced decline to 10,981.7 million USD in 2021. This indicates a reversal of the growth trend after 2019, with a significant revenue contraction in the last reported year.

Total Assets

Total assets grew from 23,652.6 million USD in 2017 to a peak of 27,234.3 million USD in 2019, showing asset expansion through the initial period. After 2019, total assets declined to 24,618.9 million USD in 2020 and further to 23,877.3 million USD in 2021. This decline in assets during the last two years suggests a contraction or divestment of assets following the prior growth phase.

Total Asset Turnover Ratio

The total asset turnover ratio was relatively stable around 0.52 to 0.55 from 2017 through 2020, indicating consistent efficiency in generating revenue from assets during this period. The ratio increased slightly to 0.55 in 2020, despite the revenue dip, implying greater asset utilization efficiency that year. However, in 2021, the ratio dropped significantly to 0.46, reflecting reduced effectiveness in utilizing assets to generate revenue under the lower revenue and asset base.

Overall, the data reveals that after a phase of growth in both revenue and assets through 2019, the company experienced declines in these key metrics for the two subsequent years. The steady asset turnover ratio until 2020 suggested maintained operational efficiency despite fluctuating revenue, but the decline in 2021 points to challenges in leveraging assets effectively in a lower revenue environment. This pattern may warrant further investigation into the underlying causes of the revenue decline and asset base reduction, as well as strategic adjustments to improve asset utilization going forward.

Revenue Trends

Revenue displayed a general upward trend from 2017 through 2019, increasing from approximately $12.27 billion to about $14.38 billion. However, revenue declined in 2020 to around $13.45 billion and further decreased in 2021 to approximately $10.98 billion. This indicates a peak in 2019 followed by a notable downturn over the subsequent two years.

Total Shareholders' Equity

Shareholders' equity showed growth from 2017 to 2019, rising from approximately $12.61 billion to $13.34 billion. In 2020, it sharply decreased to roughly $10.70 billion, followed by a modest increase in 2021 to about $10.90 billion. The decline corresponds with the period during which revenue also decreased, suggesting possible impacts on equity due to operational or market factors.

Equity Turnover Ratio

The equity turnover ratio increased steadily from 0.97 in 2017 to a peak of 1.26 in 2020, demonstrating improved efficiency in using shareholders' equity to generate revenue. However, it declined to 1.01 in 2021, aligning with the reduction in revenue and a slight recovery in equity, indicating reduced operational efficiency or market conditions affecting asset utilization during that year.

Overall Analysis

The data reflects strong growth in both revenue and equity from 2017 through 2019, with a simultaneous improvement in the equity turnover ratio, implying effective capital management and operational performance during this period. The subsequent decline in revenue and equity in 2020, accompanied by a peak and then drop in the equity turnover ratio by 2021, suggests challenges impacting financial performance and efficiency metrics. The partial recovery in equity in 2021 does not correspond to a return in revenue levels, indicating potential shifts in the company's asset base or capital structure.