Cisco Systems Inc. (NASDAQ:CSCO)

Return on Assets (ROA)

The Return on Assets shows a fluctuating trend over the observed periods. Initially, ROA increased modestly from 11.01% in late 2020 to a peak of 13.75% in late 2023. This growth phase indicates improving asset efficiency in generating profits. However, from early 2024 onwards, there is a marked decline, dropping to a low of 7.57% by mid-2025 before a slight recovery to 8.53% at the last data point. The significant decrease in ROA during this latter period suggests reduced profitability relative to the company's asset base.

Financial Leverage

Financial leverage exhibited a general downward trend from 2.49 in October 2020 to about 2.18 by late 2023, reflecting a gradual reduction in the reliance on debt relative to equity. From early 2024, leverage increased again, climbing to around 2.74 by mid-2024, before then tapering slightly to approximately 2.58 towards mid-2025. The mid-period decline followed by a resurgence signifies a shift in the company's capital structure strategy, potentially increasing debt usage after a phase of deleveraging.

Return on Equity (ROE)

The Return on Equity maintains a generally strong performance throughout the series but follows a pattern similar to ROA. ROE rose from 27.42% in October 2020 to a peak near 30.04% by late 2023, indicating robust profitability from shareholders’ equity during this time. After this peak, a steady decline occurs starting in early 2024, with ROE falling to about 20.18% by mid-2025, followed by a slight improvement to 22.04% at the final data point. This decline, although less steep proportionally than ROA, suggests decreased equity returns possibly impacted by changes in net income or equity levels correlated with leverage shifts.

The analysis of the quarterly financial ratios reveals distinct trends over the observed periods across profitability, efficiency, leverage, and return measures.

Net Profit Margin

The net profit margin demonstrated relative stability with slight fluctuations in the initial quarters, ranging predominantly between 20.9% and 23.5%. A peak occurred around early 2024, reaching approximately 23.5%, followed by a gradual decline through mid-2025 to a level near 17.9%. This downward trajectory in later periods indicates a reduction in profitability relative to revenue.

Asset Turnover

Asset turnover showed a modest increase from about 0.50 to 0.59 through early 2024, suggesting improvements in how effectively assets were utilized to generate sales. However, from that point forward, the ratio decreased significantly to around 0.43 to 0.48 by mid-to-late 2025, indicating a reduction in asset efficiency over the most recent periods.

Financial Leverage

Financial leverage ratios initially decreased from approximately 2.49 to 2.18, implying a move towards lower reliance on debt or increased equity financing. Subsequently, it rose substantially to over 2.7 by 2024, before slightly decreasing again to about 2.58 in later quarters. These movements suggest variations in the capital structure with an increasing use of leverage during the middle periods followed by mild deleveraging.

Return on Equity (ROE)

ROE followed a pattern similar to net profit margin, with an increase from roughly 25.4% to a peak of 30% in early 2024, reflecting strong profitability and effective use of equity. After this peak, ROE declined notably to approximately 20.2% by mid-2025, indicating decreased returns for shareholders. The decrease toward the end coincides with reduced profitability and asset turnover, despite fluctuations in financial leverage.

Overall, the company experienced a phase of improvement in profitability, asset efficiency, and shareholder returns culminating around early 2024. Following this peak, a declining trend in profitability, asset turnover, and ROE was observable, alongside variations in financial leverage. The financial leverage increase amid decreasing efficiency and profitability suggests a potential rise in financial risk during the latest quarters.

The analysis of the quarterly financial ratios reveals notable trends in profitability, operational efficiency, and financial structure across the examined periods.

Tax Burden

The tax burden ratio remained relatively stable around 0.80 to 0.83 through early 2024, indicating a consistent proportion of earnings paid in taxes. A marked increase occurred starting in late 2024, peaking at approximately 0.94 before slightly declining to 0.84 in the final quarter, suggesting a temporary rise in tax expenses relative to earnings during this period.

Interest Burden

This ratio exhibited slight variability but generally declined from around 0.96-0.98 in early periods to a low near 0.86 in late 2024 and early 2025. It ended with a modest recovery to 0.89. The decreasing trend points to a growing impact of interest expenses on earnings before taxes over time, particularly notable in the middle of the analyzed timeline.

EBIT Margin

The earnings before interest and taxes margin held steady around the high 20% range initially, peaking near 29% in early 2022. Subsequently, it trended downward to about 21-23% from late 2024 through 2025, indicating diminishing operational profitability. This pattern suggests challenges in maintaining margin levels despite prior stability.

Asset Turnover

The asset turnover ratio showed initial improvement from 0.50 to 0.59 through early 2024, implying better efficiency in using assets to generate revenue. However, it experienced a significant decline beginning mid-2024, falling to roughly 0.43 before a modest rebound to 0.48 by the end of the period. This downturn suggests reduced asset utilization efficiency in the latter periods.

Financial Leverage

Leverage ratios hovered between 2.18 and 2.49 for most of the timeline, illustrating moderate use of debt financing. A notable increase occurred from mid-2024 onwards, rising to about 2.74 before a gradual decline to 2.58 at the end. This increase indicates higher reliance on borrowed funds during the later phases of the data set.

Return on Equity (ROE)

ROE demonstrated strong levels near 29-30% through early 2024, reflecting robust shareholder returns. There was a subsequent decline to approximately 20-22% in the final periods, aligning with the decreases observed in EBIT margin and asset turnover. This overall decline in ROE suggests reduced effectiveness in generating profit from equity, influenced by pressure on operational margins, asset efficiency, and increased financial burden.

In summary, the analysis reveals a period of strong operational profitability and efficient asset utilization through early 2024. This was followed by a downturn characterized by elevated tax and interest burdens, decreased EBIT margins, and less effective asset use. The increased financial leverage in the later periods further influenced the decline in returns to equity holders. These trends collectively indicate emerging challenges in sustaining profitability and operational efficiency in the most recent quarters.

The financial analysis over the observed periods indicates varying trends in key performance indicators such as Net Profit Margin, Asset Turnover, and Return on Assets (ROA).

Net Profit Margin

The Net Profit Margin shows initial stability with minor fluctuations around 21-23% between October 2020 and April 2024, peaking near 23.49% in January 2024. However, from mid-2024 onwards, there is a noticeable decline, dropping to approximately 17.9% by October 2025. This downward trend suggests decreasing profitability relative to sales in the latest periods.

Asset Turnover

Asset Turnover maintains a fairly stable performance in the earlier periods, with gradual increases from 0.51 in October 2020 to a peak of 0.59 in October 2023. Nonetheless, there is a marked decrease beginning in early 2024, falling to roughly 0.43-0.46 between April 2024 and October 2025. The partial recovery toward the end of the period is slight but may indicate early signs of improvement in asset efficiency.

Return on Assets (ROA)

ROA follows a similar pattern to the Asset Turnover ratio with increases from 11.01% in October 2020 to a peak of 13.75% in October 2023. Subsequently, the metric declines significantly to a low of 7.57% in July 2025 before modestly rising to 8.53% by October 2025. The decline in ROA reflects a reduction in overall profitability generated from the company’s asset base during the latter periods.

Overall, the data depicts a period of strengthened financial performance up to late 2023, characterized by improving margins and operational efficiency. Following this peak, declining profitability and asset utilization ratios indicate challenges in sustaining performance levels, evidenced by falling profit margins and returns on assets. This trend underscores the need for management to investigate the causes and potentially recalibrate operational strategies to restore growth and efficiency.

The analysis of the financial ratios over the observed quarterly periods indicates several notable trends and changes in the company's operational efficiency and profitability.

Tax Burden

The tax burden ratio remained relatively stable around 0.80 to 0.85 for most of the periods, suggesting a consistent tax expense relative to pre-tax income. There was a significant increase starting from October 2024, peaking at 0.94 in early 2025 before decreasing back to 0.84, indicating a temporary rise in tax expenses or reduced tax efficiency during this later period.

Interest Burden

This ratio was steady near 0.96-0.98 for the majority of the timeline, reflecting consistent interest expenses relative to earnings before interest and taxes. However, starting from mid-2023, there was a clear downward trend reaching a low of 0.86 in early 2025, before a slight recovery to 0.89. This decline suggests increasing interest expenses or rising debt burden impacting earnings.

EBIT Margin

The EBIT margin fluctuated within a range of approximately 21% to 29% over the periods, indicating variation in operational profitability. Initially, the margin showed strength above 27% with periodic peaks around 29%, but a downward trend occurred from mid-2023 onwards, bottoming near 21% in late 2024 to early 2025 before a modest recovery to nearly 24%. This pattern signals reduced operational efficiency or pricing pressures in the more recent quarters.

Asset Turnover

Asset turnover exhibited gradual increases from approximately 0.50 to 0.59 through early 2024, showing improved utilization of assets to generate revenue. This was followed by a sharp decline to about 0.43 in late 2024, with slight improvement thereafter to 0.48 by mid-2025, suggesting a temporary reduction in asset efficiency that partially recovered later.

Return on Assets (ROA)

ROA generally followed an initial growth trajectory, rising from about 11.0% to around 13.75% through early 2024, reflecting enhanced profitability relative to asset base. Nevertheless, a significant downturn occurred starting in late 2024 with ROA falling below 8% and displaying only minor improvement subsequently. This decline correlates with the observed deterioration in EBIT margin and asset turnover, highlighting an overall reduced effectiveness in asset utilization for profit generation in recent periods.

Overall, the financial ratios depict a company that maintained stable tax and interest burdens in earlier periods with strong operational margins and asset efficiency. However, from mid-2023 onwards, there is a visible weakening in profitability margins, asset turnover, and return on assets, accompanied by rising interest expenses and fluctuating tax burden, indicating emerging challenges affecting financial performance.

The financial data reveals several noteworthy trends in the profitability and efficiency metrics over the analyzed periods. The tax burden ratio demonstrates relative stability in the earlier periods, fluctuating marginally around 0.80 to 0.85. However, a significant increase is observed starting from the period around October 2024, peaking at approximately 0.94 before gradually decreasing to 0.84, indicating variable tax expense impacts on earnings during these later periods.

The interest burden ratio maintains a high and stable level near 0.96 to 0.98 through most of the initial periods, suggesting consistent management of interest expenses relative to earnings before interest and taxes. From mid-2024, however, a downward trend emerges, dropping to a low near 0.86 before a slight recovery to 0.89 by the end of the dataset. This decline could reflect higher interest expenses or reduced operating income in these later quarters.

The EBIT margin percentage starts strong, hovering with slight fluctuations around 28% to 29% in the earlier timeline, indicating robust operational profitability. Beginning around mid-2023, this margin experiences a gradual decline, dipping significantly to around 21% by the latter periods. This downward movement suggests increasing operational costs or pressures on income from core business activities during these quarters.

The net profit margin similarly demonstrates a high and steady range near 21% to 23% in the earlier phases, consistent with healthy profitability after all expenses. From early 2023 onward, a general decreasing trend is apparent, with margins falling towards 17% to 18% towards the end. This reduction aligns with the trends seen in EBIT margin and interest burden, pointing to combined impacts from operational and financial costs affecting overall net earnings.

Overall, the data indicates that while operational efficiency and profitability were strong in the initial periods, there is a clear pattern of pressure emerging from mid-2023 through 2025. This is characterized by increased tax burden variability, a rising cost of interest, and compressing margins at both EBIT and net profit levels. Such trends highlight challenges in cost management and external financial factors influencing net earnings in the more recent quarters.

Tax Burden

Consistent near 0.80 initially, rising above 0.90 around late 2024, then moderating to 0.84, indicating fluctuating effective tax rates or accounting impacts.

Interest Burden

Maintained high stability around 0.96-0.98 initially, then declined steadily from mid-2024 to about 0.86 before partial recovery, suggesting increasing interest expenses relative to EBIT.

EBIT Margin

Started strong near 28-29%, then gradually decreased to roughly 21% by late 2025, pointing to operational margin compression.

Net Profit Margin

Followed a similar trajectory to EBIT margin, from approximately 22% down to 17-18%, reflecting combined effects of rising costs and margin pressures post-operational profits.