Broadcom Inc. (NASDAQ:AVGO)

Return on Assets (ROA)

The ROA demonstrates an initial gradual increase from 3.26% in early 2020 to a peak of 19.44% in the third quarter of 2023, indicating an improving efficiency in asset utilization. After this peak, a notable decline occurs, dropping sharply to 3.03% by the third quarter of 2024. Subsequently, the ratio recovers somewhat, reaching 11.43% by mid-2025. This pattern suggests a period of strong operational performance followed by a significant setback and a partial recovery.

Financial Leverage

Financial leverage maintains a relatively stable range between 3.0 and 3.4 from early 2020 through late 2022, suggesting a consistent use of debt relative to equity. Beginning in early 2023, there is a gradual decrease in the ratio, declining from approximately 3.13 to 2.26 by mid-2025. This trend indicates a reduction in leverage, which could reflect a strategic move towards lower debt levels or an increase in equity financing during this period.

Return on Equity (ROE)

ROE exhibits strong growth from 10.83% in early 2020 to a peak of 63.03% in mid-2023, reflecting significant improvement in generating shareholder returns. This growth parallels the increase in ROA and suggests high profitability and effective financial management during this period. However, similar to ROA, ROE experiences a steep decline afterward, settling around 7.76% by the third quarter of 2024. A recovery phase follows, with ROE rising again to 25.84% by mid-2025. The fluctuations in ROE together with changes in leverage and asset returns imply volatility in profitability and capital structure during the later periods.

The analysis of the financial ratios over the presented quarters reveals several notable trends and fluctuations.

Net Profit Margin

The net profit margin showed a general upward trend from early 2020 through late 2023, increasing from approximately 11.6% to a peak above 39%. This suggests improving profitability relative to sales over this period. However, starting in early 2024, there was a sharp decline, with the margin dropping to as low as 10.88% mid-2024 before recovering to over 31% by the third quarter of 2025. This pattern indicates a period of volatility or operational challenges followed by a significant recovery phase.

Asset Turnover

Asset turnover gradually increased from 0.28 in early 2020 to a maximum near 0.5 in late 2023, indicating improved efficiency in using assets to generate revenue. Post-2023, there was a temporary decline in asset turnover to around 0.22 to 0.24 during early 2024 but a subsequent recovery to about 0.36 by mid-2025. This fluctuation suggests that asset utilization efficiency was negatively impacted temporarily but later improved.

Financial Leverage

Financial leverage remained relatively stable with slight fluctuations, generally trending downward from about 3.3 in early 2020 to approximately 3.0 by late 2023. From early 2024 onward, there was a more pronounced reduction in leverage, declining steadily to about 2.26 by mid-2025. This indicates a gradual decrease in the use of debt relative to equity, potentially signaling a more conservative capital structure or deleveraging trend.

Return on Equity (ROE)

ROE exhibited strong growth from around 11% in early 2020 to over 63% in mid-to-late 2023, reflecting significant value creation for shareholders during that period. This increase corresponds with rising net profit margins and asset turnover, supported by moderate financial leverage. However, ROE experienced a steep drop in early 2024 to below 8%, paralleling declines in other performance metrics. Subsequently, ROE showed a recovery trend, reaching about 26% by mid-2025, though it remained well below the previous peak.

In summary, the company demonstrated improving profitability, asset efficiency, and shareholder returns up until late 2023, supported by stable financial leverage. The subsequent period shows notable volatility with declines in margins, turnover, leverage, and returns, followed by signs of recovery entering 2025. These patterns suggest external or internal challenges impacting financial performance temporarily, with efforts toward operational recovery and deleveraging evident in the most recent quarters.

Tax Burden

The tax burden ratio showed a gradual decline from periods starting in early 2020 through late 2022, moving from values above 1.0 to a low around 0.92. This indicates improved tax efficiency during this span. However, starting in early 2023, the ratio exhibited increased volatility with significant dips to as low as 0.52 in mid-2024 before recovering to 0.96 by the latter part of 2025, suggesting instability or changes in tax-related matters during the recent periods.

Interest Burden

Interest burden demonstrated an upward trend from early 2020 through late 2022, rising from 0.6 to a peak of approximately 0.9. This signifies a decrease in interest expense relative to earnings before interest and taxes over these periods. In 2023 and 2024, however, the trend reversed, showing a decline down to values near 0.71, indicating an increase in interest burden, but it partially recovered towards the most recent periods.

EBIT Margin

The EBIT margin showed consistent growth from 16.59% in early 2020 to a peak near 46% by late 2022 and early 2023. This reflects substantial improvement in operating profitability during this timeframe. Despite this, from early 2023 onwards, the margin declined significantly to around 26% by late 2024 before rebounding moderately to approximately 38.5% by mid-2025, indicating fluctuations in operating efficiency or cost structures.

Asset Turnover

Asset turnover improved steadily through early 2023, rising from 0.28 to near 0.5, which suggests an enhancement in asset utilization and revenue generation from assets. Following this period, asset turnover declined abruptly to around 0.22 in early 2024 but then gradually recovered to about 0.36 by mid-2025, implying a temporary inefficiency or asset base expansion relative to sales during early 2024 that corrected over time.

Financial Leverage

Financial leverage remained relatively stable at levels slightly above 3.0 up to early 2023, reflecting a consistent degree of debt usage relative to equity. After that, leverage decreased steadily, reaching approximately 2.26 by mid-2025, which points to reduced reliance on debt financing or equity base expansion during later periods.

Return on Equity (ROE)

ROE experienced strong growth from approximately 10.8% in early 2020 to over 60% by early 2023, driven by improvements in profitability and operational efficiency. Subsequently, ROE sharply declined to low teens and single digits in 2023 and early 2024. A recovery phase followed with the ratio climbing back to about 26% by mid-2025, indicating a partial restoration of shareholder returns after a period of significant volatility.

The analysis of the quarterly financial data reveals distinct trends in profitability, efficiency, and asset utilization over the reported periods.

Net Profit Margin

The net profit margin exhibited a general upward trajectory from the beginning through late 2023, increasing from around 11.64% to peak levels exceeding 39%. This trend indicates improving profitability and cost management efficiency during this timeframe. However, a notable decline occurs starting in early 2024, where the margin sharply reduces to as low as approximately 10.88% before rebounding to around 31.59% by mid-2025. This volatility in profit margin during 2024 suggests possible operational challenges, market fluctuations, or increased costs affecting profitability temporarily.

Asset Turnover

Asset turnover ratios gradually improved initially, moving from 0.28 to nearly 0.50 between early 2020 and late 2023, indicating enhanced utilization of assets to generate revenue. This improvement reflects operational efficiency gains in asset use. Nonetheless, from early 2024 onward, asset turnover drops significantly to around 0.22, then incrementally rises but remains below prior peak levels through mid-2025. The decline indicates a temporary reduction in asset productivity during this period, potentially linked to broader market or internal business disruptions.

Return on Assets (ROA)

Return on assets patterns align closely with the margin and turnover trends, initially showing consistent growth from approximately 3.26% in early 2020 to near 19.44% by late 2023. This improvement suggests rising overall efficiency and profitability from asset investments. Yet, a pronounced dip is observed starting in early 2024, with ROA falling sharply to 3.03%, followed by a gradual recovery reaching about 11.43% mid-2025. This drop and subsequent recovery further highlight a phase of operational or market challenges before stabilization.

In summary, the data point to a phase of strengthening financial performance up to the end of 2023, characterized by increased profit margins, better asset turnover, and rising returns on assets. A distinct downturn occurs in early 2024, impacting all three metrics, which then begin recovering toward mid-2025. These fluctuations suggest a cycle of growth, decline, and partial rebound that may reflect changes in market conditions, business strategy, or external economic factors.

The analyzed financial ratios and margins reveal distinctive trends over the observed periods, suggesting variations in the company's operational efficiency, profitability, and financial burden management.

Tax Burden

The tax burden ratio exhibited a generally declining trend from early 2020 through late 2023, decreasing from above 1.1 to below 1.0, signaling an improving tax efficiency or reductions in tax expenses relative to income. However, in 2024 the ratio sharply declined to as low as 0.52 before gradually increasing again towards 0.96 by mid-2025, indicating potential fluctuations in tax liabilities or adjustments in reported earnings affecting this measure.

Interest Burden

The interest burden ratio showed improvement over the initial period, climbing steadily from 0.60 to approximately 0.90 by late 2023, which reflects a decreasing interest expense relative to earnings before interest and taxes (EBIT). This improvement suggests better cost of debt management or decreasing leverage costs. Nonetheless, from early 2024 onward, a declining trend emerged again, dropping to around 0.71 before recovering partially to 0.85, indicating some volatility in interest expenses or financing structure.

EBIT Margin

The EBIT margin demonstrated considerable improvement from 16.59% in early 2020 to a peak exceeding 46% in late 2023, indicating strong operational profitability growth during this period. This sharp rise may be attributable to enhanced operational efficiency or revenue growth outpacing expenses. Starting in early 2024, the margin declined to around 26.36% before recovering to approximately 38.56% by mid-2025, showing some cyclical or market-driven pressures impacting profitability but eventually a rebound in earnings quality.

Asset Turnover

Asset turnover increased gradually from 0.28 in early 2020 to a high of 0.50 in late 2023, reflecting improved utilization of assets to generate revenue. This positive trajectory suggests better asset management or operational scaling. However, the ratio sharply decreased in early 2024 to around 0.22 before moderately recovering to 0.36 by mid-2025, indicating a temporary decline in operational efficiency or asset utilization.

Return on Assets (ROA)

The ROA showed a marked upward trend, rising from approximately 3.26% in early 2020 to peak near 19.44% in late 2023, demonstrating significantly improved profitability relative to asset base. This improvement aligns with the growth observed in EBIT margins and asset turnover. Nonetheless, in 2024, ROA fell sharply to as low as 3.03% before climbing back to 11.43% by mid-2025, pointing to a period of reduced asset profitability potentially linked to the earlier noted declines in tax and interest burdens, asset turnover, and EBIT margin.

The financial data reveals several notable trends across the analyzed periods, reflecting changes in profitability and financial efficiency.

Tax Burden Ratio

This ratio exhibits a general declining trend from early 2020 through the end of 2023, decreasing from values above 1.0 to levels around 0.9. This suggests improved tax efficiency during this period. However, starting in 2024, there is an observed increase with some fluctuations, including a significant dip to 0.52 followed by a rebound nearing 1.0 by mid to late 2025, indicating variability in tax burden during recent periods.

Interest Burden Ratio

The interest burden shows a steady upward trajectory from 0.6 at the start of 2020 to a peak near 0.9 in late 2023, reflecting a reduction in interest expenses relative to operating income or possibly improved interest coverage. Subsequently, a downward adjustment occurs through 2024, falling back to the 0.7–0.8 range, though it begins to rise again toward the latest periods, suggesting fluctuations in interest cost management.

EBIT Margin

Operating profitability, measured by EBIT margin, demonstrates a strong positive growth trend over the first three years, increasing from approximately 16.6% to a high exceeding 46% by late 2023, indicating enhanced operating efficiency and margin expansion. From early 2024 onwards, however, margins contract noticeably to near 26% by late 2024 but rebound to about 38.5% in the most recent periods, pointing toward cyclical pressures or changes in operational conditions followed by recovery.

Net Profit Margin

The net profit margin follows a similar overall upward trend, rising from around 11.6% in early 2020 to nearly 39.3% at the end of 2023, signifying substantial improvements in overall profitability after all expenses and taxes. This is followed by a marked decline during 2024, reaching a low near 10.9%, suggesting a period of margin compression possibly due to increased costs, reduced revenues, or other factors impacting net income. A recovery phase is evident thereafter, with margins improving to just above 31% by the latest date, reflecting a restoration of profitability.

Overall, the data indicates a period of significant enhancement in profitability and efficiency through the first three to four years, marked by margin expansion and better handling of tax and interest burdens. The more recent period shows volatility with marked declines in key margins and ratios, followed by signs of recovery toward the end of the timeline. This pattern suggests both external and internal factors impacting financial performance, including possible economic cycles, changes in operational strategies, cost management, or tax circumstances.