Broadcom Inc. (NASDAQ:AVGO)

Return on Assets (ROA)

The return on assets displayed a generally positive trend from November 2020 to October 2023, increasing significantly from 3.9% to a peak of 19.33%. However, this was followed by a sharp decline to 3.56% in November 2024, before rebounding to 13.52% in November 2025. This fluctuation indicates variability in the company's efficiency in generating profits from its assets, with a notable dip during the year ending November 2024.

Financial Leverage

Financial leverage ratios showed a gradual downward trend over the periods reviewed. Starting at 3.18 in November 2020, the leverage ratio experienced minor fluctuations but declined more consistently from 3.04 in October 2023 to 2.1 in November 2025. This decline suggests a reduction in the company's reliance on debt financing relative to equity over time, indicating a possible shift toward a more conservative capital structure.

Return on Equity (ROE)

The return on equity experienced substantial growth between November 2020 and October 2023, rising from 12.4% to a peak of 58.7%. Similar to ROA, there was a pronounced decrease to 8.71% in November 2024, followed by a recovery to 28.45% by November 2025. These variations reflect changes in the company’s ability to generate income from shareholders' equity, with significant volatility particularly in the year ending November 2024.

Overall Observations

The financial ratios reveal a pattern of initial improvement in profitability and returns, accompanied by a mild decline in leverage. The sharp decreases in both ROA and ROE during the year ending November 2024 indicate an event or circumstance that adversely affected profitability that year, though the subsequent recovery suggests resilience and a partial return to previous performance levels. The consistent decrease in financial leverage over time implies a strategic move toward lower financial risk.

Net Profit Margin

The net profit margin exhibited notable fluctuations over the analyzed periods. It increased significantly from 12.39% to a peak of 39.31% by late 2023, indicating improved profitability during that phase. However, a sharp decline to 11.43% occurred in 2024, followed by a recovery to 36.2% in 2025, suggesting volatility potentially linked to operational or market factors impacting profit generation.

Asset Turnover

Asset turnover demonstrated an overall increasing trend from 0.31 in 2020 to 0.49 in 2023, reflecting enhanced efficiency in using assets to generate sales. Nevertheless, this was followed by a regression to 0.31 in 2024 and a partial recovery to 0.37 in 2025, which may imply temporary setbacks in asset utilization or shifts in asset base versus sales volumes.

Financial Leverage

Financial leverage showed a gradual decrease from 3.18 in 2020 to 2.1 by 2025. This trend indicates a reduction in reliance on debt financing relative to equity, which could imply a strategic move towards a more conservative capital structure or improved equity base over time.

Return on Equity (ROE)

ROE experienced substantial volatility, with a rise from 12.4% in 2020 to a high of 58.7% in 2023, denoting strong shareholder profitability and effective management of equity resources during these years. Subsequently, a steep drop to 8.71% in 2024 was observed before rebounding to 28.45% in 2025. The fluctuations in ROE are partly influenced by corresponding changes in profit margins, asset turnover, and financial leverage.

Tax Burden

The tax burden ratio exhibits significant variability over the periods, starting at 1.21 and decreasing to a low of 0.61 before rising again to 1.02. This fluctuation suggests inconsistency in tax expense relative to pre-tax earnings, with a notable dip around the 2024 period followed by a partial recovery.

Interest Burden

The interest burden ratio shows a general increase from 0.58 to 0.9 between 2020 and 2023, indicating improved operational income available after interest expenses, followed by a decline in subsequent years to 0.71 and then a rise to 0.88. This pattern suggests periods of fluctuating interest expense impact on earnings before tax.

EBIT Margin

The EBIT margin demonstrates a strong upward trend from 17.66% in 2020 to a peak of 46.68% in 2023, denoting improved profitability at the operating level. However, this is followed by a sharp decline to 26.36% in 2024 and a recovery to 40.6% in 2025. This indicates some volatility in operating efficiency or cost structure during these years.

Asset Turnover

Asset turnover shows progressive improvement from 0.31 in 2020 to 0.49 in 2023, implying increasingly efficient use of assets to generate revenue. However, there is a drop back to 0.31 in 2024, followed by a slight recovery to 0.37 in 2025, suggesting some challenges in asset utilization in the interim period.

Financial Leverage

Financial leverage remains relatively stable around 3.0 in the early years, with a modest increase to 3.23 in 2022, but then it declines steadily to 2.45 in 2024 and further to 2.1 in 2025. This decreasing trend indicates a reduction in the use of debt relative to equity over time, which may affect the company’s risk and return profile.

Return on Equity (ROE)

The ROE shows substantial growth, rising from 12.4% in 2020 to a peak of 58.7% in 2023, reflecting strong overall profitability and efficient use of equity capital. However, this is followed by a sharp decline to 8.71% in 2024, before rebounding to 28.45% in 2025. The sharp variations suggest that the company experienced significant changes in profitability and capital structure factors affecting shareholder returns during the latest periods.

Net Profit Margin

The net profit margin demonstrates a generally upward trend from 12.39% in 2020 to a peak of 39.31% in 2023, signifying improved profitability efficiency during this period. However, there is a significant decline to 11.43% in 2024, followed by a recovery to 36.2% in 2025. This fluctuation indicates variability in cost control or revenue quality in those years.

Asset Turnover

The asset turnover ratio steadily increased from 0.31 in 2020 to a high of 0.49 in 2023, suggesting enhanced efficiency in using assets to generate sales. This efficiency dropped back to 0.31 in 2024 but experienced a modest improvement to 0.37 in 2025. The dip in 2024 may indicate underutilization of assets or lower sales generation relative to asset base during that year.

Return on Assets (ROA)

ROA follows a pattern similar to other indicators, rising from 3.9% in 2020 to 19.33% in 2023, reflecting increased overall profitability relative to total assets. A sharp decrease to 3.56% in 2024 is observed, with a subsequent rebound to 13.52% in 2025. This volatility mirrors the fluctuations in net profit margin and asset turnover, pointing to inconsistent performance in asset utilization or earnings generation in the mid-period.

The financial data reveals notable trends in the company's operational efficiency and profitability over the observed periods.

Tax Burden

The tax burden ratio exhibits significant variability across the years, starting at 1.21 and then decreasing to a low of 0.61 before rising again to slightly above 1. This fluctuation suggests changes in tax expenses relative to pre-tax income, indicating potential shifts in tax rates, tax planning strategies, or one-time tax events affecting net income.

Interest Burden

The interest burden shows an overall upward trend from 0.58 initially to 0.88 in the latest periods, with some minor fluctuations. The increase reflects a relatively improved ability to cover interest expenses from operating income, which could be due to lower interest costs, improved earnings before interest and taxes, or changes in debt structure.

EBIT Margin

The EBIT margin demonstrates a significant increase from 17.66% to a peak of approximately 46.68%, before experiencing a decline to 26.36% and then recovering to 40.6%. This pattern suggests improvements in operational profitability, possibly driven by cost management, pricing power, or changes in product mix, though the dip indicates some periods of margin pressure or increased costs.

Asset Turnover

Asset turnover follows a pattern of growth from 0.31 to nearly 0.49, indicating enhanced efficiency in generating revenue from assets. However, this is followed by a decline back to around 0.31 and a slight recovery. The initial improvement may suggest better utilization of assets or revenue growth outpacing asset growth, while the subsequent decline hints at asset base expansion or revenue slowing.

Return on Assets (ROA)

ROA shows a strong upward trajectory from 3.9% to 19.33%, reflecting increased overall profitability and asset utilization. The sharp decrease to 3.56% in one period followed by a rebound to 13.52% could be attributable to temporary setbacks such as extraordinary expenses or revenue shortfalls. Overall, the improvement in ROA aligns with trends in EBIT margin and asset turnover, underscoring enhanced financial performance.

In summary, the company has demonstrated marked improvements in profitability and asset efficiency over the period, despite some volatility in tax burden and asset turnover ratios. These fluctuations highlight periods of operational and financial adjustments, with a general trend toward stronger earnings performance and improved resource utilization.

The financial data over the observed periods reveal several noteworthy trends regarding profitability and burden ratios. The Tax Burden ratio exhibits fluctuations, beginning above 1 in the earlier period, dipping below 1 in the middle years, reaching a low of 0.61, before rising again to slightly above 1 in the most recent period. This pattern indicates variability in the effective tax rate relative to earnings, with certain years reflecting a tax burden below the accounting profit before tax, possibly due to tax credits or deferred taxes.

The Interest Burden ratio shows a general improvement over time, starting from a low of 0.58 and increasing toward approximately 0.88 in the latest period. This suggests a reduction in the relative impact of interest expenses on earnings before tax, reflecting either improved debt management or declining interest costs relative to operating income.

Profitability margins, measured by EBIT Margin and Net Profit Margin, demonstrate significant upward trends through the middle years, peaking notably around the period ending in 2023. The EBIT Margin rises from approximately 17.7% in 2020 to a peak of nearly 46.7% before dropping substantially to around 26.4% in the subsequent year, then rebounding again to over 40%. Similarly, the Net Profit Margin increases from 12.4% to a high of 39.3%, declines sharply to just above 11%, and then recovers above 36% in the final period.

The sharp declines in both EBIT and Net Profit Margins during one observed year stand out as exceptions in an otherwise generally ascending pattern. These variations may indicate external factors or exceptional items affecting profitability, notably impacting net income beyond operating earnings. The reconciliation between EBIT and Net Profit Margins over the years follows a consistent pattern, with the Net Profit Margin remaining proportionally lower, as expected due to interest, taxes, and other non-operating expenses.

In summary, the data reflect an overall improvement in profitability and a reduction in interest burden over the period, interrupted by one significant dip in margin performance. Tax burden variability indicates changes in tax planning or tax environment impacts. The fluctuations suggest a dynamic operating environment with periods of strong earnings growth and margin expansion, tempered by intervals of increased financial or operational challenges.