Cisco Systems Inc. (NASDAQ:CSCO)

Return on Assets (ROA)

The ROA values are available from the fourth quarter of 2019 onwards. Initially, ROA shows a strong performance, peaking around 13.75% in the third quarter of 2023. Following this peak, a downward trend is observed, with ROA declining steadily through 2024 to a low near 7.57% in the third quarter of 2024. In the most recent quarters, a slight recovery is noted, with ROA rising to about 8.32% by mid-2025.

Financial Leverage

Financial leverage starts at 2.69 in late 2019 and gradually decreases to a low near 2.18 by mid-2023, indicating a reduction in leverage over this period. Beginning in late 2023, leverage begins to increase again, reaching approximately 2.74 by early 2025, before declining slightly toward 2.61 by mid-2025. This pattern suggests a cycle of deleveraging followed by a modest increase and stabilization.

Return on Equity (ROE)

ROE data also commences from late 2019. It mirrors the ROA trend, with strong initial growth reaching a peak of around 30.04% in the third quarter of 2023. Thereafter, ROE experiences a marked decline throughout 2024, falling to approximately 20.18% by the third quarter of 2024. Slight recovery appears in the subsequent periods, with ROE increasing to about 21.73% by mid-2025. The variation in ROE aligns with the changes in financial leverage and ROA, reflecting the company’s shifting profitability and capital structure over the timeframe.

Net Profit Margin

The net profit margin demonstrates a fluctuating pattern over the observed periods. Initially unavailable for several quarters, it begins at 22.75% in the quarter ending October 24, 2020. It experiences a gradual decline from 22.75% to a low of 16.96% around April 26, 2025. Prior to this decline, there is a period of relative stability and mild variation around the 21% to 23% range. Overall, the margins suggest some erosion in profitability over the long term, especially from early 2023 onwards.

Asset Turnover

The asset turnover ratio remains relatively stable with minor fluctuations between 0.43 and 0.59 throughout the periods where data is available. It starts at 0.52 and shows a slight increase, peaking at 0.59 in January 2024, indicating marginal improvement in efficient asset use around this date. However, a noticeable decline occurs after this peak, dropping to the low 0.43 range by early 2025, suggesting reducing efficiency in generating sales from assets towards the end of the data series.

Financial Leverage

Financial leverage shows a declining trend initially, moving from 2.69 in October 2019 down to around 2.18 by July 2023, indicating a decreasing reliance on debt financing relative to equity during this period. However, from mid-2023 onwards, leverage rises again, reaching around 2.74 by January 2025 and then modestly decreasing to 2.61 by July 2025. This pattern reflects a conservative approach earlier followed by increased leveraging in recent quarters.

Return on Equity (ROE)

The return on equity exhibits an initial decrease from approximately 29.57% in October 2020 to around 25.41% in July 2020, followed by a recovery that peaks near 30.04% in October 2023. After this peak, ROE declines steadily to about 20.18% in April 2025, with a slight rebound to 21.73% by July 2025. The trend suggests improving profitability and efficient equity use in the mid-period, with a subsequent weakening in later quarters.

Overall Observations

The analyzed financial ratios reveal a period of relative stability and strength in profitability and operational efficiency until early 2023. Post this period, declines in net profit margin, asset turnover, and return on equity indicate emerging challenges impacting profitability and asset utilization. The increase in financial leverage in the later periods may imply a strategic shift toward higher debt financing, potentially to support operations amid declining efficiency and profit margins.

The analyzed data reveals distinct trends in key financial ratios over the observed periods.

Tax Burden

The tax burden ratio remained relatively stable at around 0.80 from the earliest available data up to early 2023. From the period starting in early 2023, the ratio showed a gradual increase, reaching a peak of 0.94 in early 2025. This suggests a rising proportion of earnings being absorbed by taxes in the most recent periods.

Interest Burden

The interest burden ratio demonstrated minor fluctuations but generally exhibited a downward trend beginning around early 2024, decreasing from approximately 0.97 to values near 0.86 by mid-2025. The decline indicates an increasing impact of interest expenses on earnings before taxes during the latest quarters.

EBIT Margin

EBIT margins started above 29% during late 2019 and generally declined through 2023 and 2024. The margin dropped to approximately 21% to 22% in the latest quarters, reflecting a contraction in operating profitability over time. Minor volatility is evident, but the overall direction is downward.

Asset Turnover

Asset turnover exhibited a slight increase from about 0.52 in late 2019 to a peak close to 0.59 around early 2023, suggesting improved efficiency in using assets to generate sales. However, thereafter, a significant decline occurred, falling to near 0.43-0.46 during the most recent periods, indicating reduced asset utilization efficiency.

Financial Leverage

Financial leverage ratios decreased slightly from approximately 2.69 in late 2019 to about 2.18 by early 2023, denoting a cautious reduction in reliance on debt or equity magnification. This trend reversed sharply starting in early 2024, climbing back above 2.7 by mid-2025, indicating renewed higher leverage levels.

Return on Equity (ROE)

ROE trended downward from close to 30% in late 2019 to around 20% in the most recent quarters. The decline aligns with reductions in both EBIT margin and asset turnover, despite some variations in financial leverage. This overall decrease signals diminished profitability for shareholders over the period analyzed.

In summary, the data conveys a period of relative stability in profit margins and capital efficiency early on, followed by declines in operational profitability, asset efficiency, and shareholder returns in recent quarters. Increased tax burden and fluctuating leverage contribute to these dynamics. These trends may warrant focused review for strategic financial planning and operational improvement.

The analysis of financial ratios over the reported quarters reveals several notable trends related to profitability, efficiency, and asset utilization.

Net Profit Margin (%)

Net profit margins show an overall downward trend in the most recent quarters after a period of relative stability. From a peak near 23.49% around early 2024, the margin declines steadily, reaching approximately 17.97% by mid-2025. This decrease indicates a compression in profitability relative to revenue, suggesting rising costs or pricing pressures affecting the company’s bottom line.

Asset Turnover (ratio)

Asset turnover exhibited moderate variation with a general decline observable towards the latest quarters. After fluctuations around the 0.5 to 0.56 range between 2020 and early 2024, the ratio declines sharply to around 0.43 to 0.46 from mid-2024 onward. This reduction implies a diminished efficiency in generating sales from asset investments, which could be attributable to asset base growth outpacing sales or operational inefficiencies.

Return on Assets (ROA) (%)

Return on assets follows a pattern that closely mirrors the net profit margin trend, with an initial improvement peaking around early 2024 at approximately 13.75%. Subsequently, ROA declines significantly to around 7.62% to 8.32% in the most recent quarters. This downward movement reflects the combined impact of shrinking profitability and reduced asset productivity, signaling challenges in managing assets effectively to generate earnings.

In summary, the company experienced a period of improving profitability and asset utilization up to early 2024, followed by a marked deterioration in these key financial metrics. The declines in net profit margin, asset turnover, and return on assets in the most recent quarters might indicate operational challenges, increased competition, or market conditions adversely impacting financial performance and efficiency.

The data reveals several significant trends across the financial performance measures over the assessed periods.

Tax Burden

The tax burden ratio exhibits relative stability throughout the timeline, maintaining values generally around 0.8 to 0.85 for most observed quarters. Notably, there is a marked increase beginning around early 2024, reaching peaks near 0.93 to 0.94 by late 2024 and early 2025, indicating a heavier effective tax rate or reduced tax benefits in recent quarters.

Interest Burden

The interest burden remains consistent and robust around 0.96 to 0.98 for the majority of the periods until the end of 2023. From early 2024 onward, the ratio declines steadily, falling below 0.9 and reaching approximately 0.86 to 0.87 in mid to late 2025. This trend suggests an increasing proportion of earnings being consumed by interest expenses, or a higher debt servicing cost in more recent quarters.

EBIT Margin

The EBIT margin demonstrates a gradual downward trajectory over the extended period. Starting from approximately 29.5% in late 2019, the margin fluctuates somewhat but generally trends lower, declining below 25% by mid-2024 and remaining near the 21-22% range into 2025. This decline could be indicative of cost pressures, pricing challenges, or changes in product mix affecting operational profitability.

Asset Turnover

Asset turnover shows a relatively moderate range with initial values around 0.52 and a modest increase to nearly 0.59 by late 2022. However, from early 2024 onward, this metric abruptly decreases to approximately 0.43 to 0.46, which might reflect reduced sales efficiency relative to asset base or asset growth outpacing revenue generation during later periods.

Return on Assets (ROA)

ROA trends correspond logically with the changes seen in EBIT margin and asset turnover. ROA begins near 11.8% in late 2019, peaks around 13.75% in early 2023, but subsequently experiences a notable decline down to under 8.5% in 2024 and mid-2025. The diminished ROA despite relatively stable asset turnover initially, followed by its decline, points to a contraction in profitability impacting overall asset utilization returns.

Overall, the financial indicators portray a company experiencing pressures on profitability margins and increasing costs related to interest and taxation, alongside a reduction in asset utilization effectiveness. These trends collectively contribute to a weakening return on assets in the more recent periods, signaling potential challenges in operational efficiency and financial management that may require strategic attention.

The financial ratios presented indicate several notable trends over the analyzed periods.

Tax Burden

The tax burden ratio remains relatively stable around 0.8 during most quarters, indicating a consistent portion of earnings retained after taxes. However, from the period starting October 2023 through July 2025, there is a noticeable increase, with the ratio rising gradually to approximately 0.92-0.94. This upward trend suggests an improvement in tax efficiency or a reduction in effective tax rates over these periods.

Interest Burden

The interest burden ratio is steady near 0.96-0.98 for a considerable duration, reflecting relatively low interest expenses in relation to earnings before interest and taxes. Starting in early 2023, a decline becomes evident, with the ratio decreasing to 0.86-0.87 by mid-2025. This decline implies increased interest expenses or financial costs impacting earnings during the later periods.

EBIT Margin

The EBIT margin begins at approximately 29.5% and demonstrates a slow but steady decline over time, reaching the low twenties by the latest quarters in 2024 and 2025. This reduction suggests that operating profitability is weakening, potentially due to increased operating costs or competitive pressures affecting operating income relative to revenues.

Net Profit Margin

The net profit margin mirrors the EBIT margin trend, starting around 22.75% and gradually decreasing to below 18% in the recent periods. The margin fluctuates slightly in mid-periods but exhibits a definitive downward course in the latest quarters. This decline may be attributed to rising interest expenses as indicated by the interest burden ratio, alongside the gradual erosion of operating margins and other non-operating costs, impacting overall profitability.

In summary, the data illustrates stable tax efficiency alongside increasing interest expenses, which, combined with the gradual erosion of operating margins, results in decreased profitability over the most recent reporting periods. These trends highlight potential challenges in maintaining profit levels amid rising financial costs and changing operational dynamics.