Micron Technology Inc. (NASDAQ:MU)

An analysis of the annual financial ratios reveals several noteworthy trends and fluctuations over the observed six-year period.

Return on Assets (ROA)

The ROA exhibited a generally positive trajectory from 5.01% in 2020 to a peak of 13.11% in 2022, indicating improving asset efficiency during this phase. However, a precipitous decline occurred in 2023, resulting in a negative ROA of -9.08%. Subsequently, the ratio recovered to 1.12% in 2024 and further increased to 10.31% by 2025, suggesting a significant rebound in the company's ability to generate returns from its assets.

Financial Leverage

Financial leverage remained relatively stable at the beginning, with a slight decrease from 1.38 in 2020 to 1.33 in 2022, implying a marginal reduction in reliance on debt financing relative to equity. However, from 2023 onwards, leverage increased to 1.46 and continued to rise to 1.54 in 2024, before slightly decreasing to 1.53 in 2025. This pattern suggests a gradual increase in the use of debt, which may have contributed to the volatility observed in profitability metrics.

Return on Equity (ROE)

ROE followed a trend similar to ROA, growing from 6.89% in 2020 to a high of 17.41% in 2022, reflecting strong shareholder returns. This was followed by a sharp decline to -13.22% in 2023, indicating a significant loss in equity profitability. Recovery was noted thereafter, with ROE rising to 1.72% in 2024 and substantially improving to 15.76% in 2025. The movement in ROE is consistent with the fluctuations in ROA and indicates that the company faced a challenging period but managed to restore value for shareholders subsequently.

Overall, the data suggest that the company experienced a period of strong operational performance up to 2022, followed by a considerable downturn in 2023 impacting asset and equity returns. The increase in financial leverage from 2023 could have amplified the effects of this downturn. However, the subsequent recovery in ROA and ROE by 2025 indicates effective management responses and an improvement in financial health, despite the relatively higher leverage.

The analysis of the financial ratios over the six-year period reveals significant fluctuations and a general pattern of volatility in the company's profitability and efficiency metrics.

Net Profit Margin (%)

The net profit margin showed an improving trend from 12.54% in 2020 to a peak of 28.24% in 2022, indicating increasing profitability during this period. However, this was followed by a substantial decline to -37.54% in 2023, reflecting a significant loss. Subsequently, the margin gradually recovered to 3.1% in 2024 and further increased to 22.84% in 2025, suggesting a strong rebound in profitability towards the end of the period.

Asset Turnover (ratio)

The asset turnover ratio displayed moderate variability. It increased slightly from 0.40 in 2020 to 0.47 in 2021, then remained relatively stable around 0.46 in 2022. In 2023, the ratio declined sharply to 0.24, pointing to a reduced efficiency in utilizing assets to generate sales. The ratio improved again in 2024 to 0.36 and nearly returned to previous levels at 0.45 in 2025, indicating a recovery in asset utilization efficiency.

Financial Leverage (ratio)

Financial leverage remained relatively stable with a slight upward trend over the observed period. Starting at 1.38 in 2020, it declined marginally to 1.33 by 2022, then increased to 1.46 in 2023 and further to 1.54 in 2024, before slightly decreasing to 1.53 in 2025. This suggests a modest increase in the use of debt financing or borrowed funds over the years, which could amplify both gains and losses.

Return on Equity (ROE) (%)

The return on equity mirrored the net profit margin trends. It improved steadily from 6.89% in 2020 to 17.41% in 2022, demonstrating enhanced shareholder value creation during this period. A dramatic decline to -13.22% occurred in 2023, indicating a period of negative returns to equity holders. ROE then recovered to 1.72% in 2024 and rose substantially to 15.76% in 2025, reflecting a recovery in profitability and effective equity utilization.

Tax Burden

The tax burden ratio remains relatively stable between 0.91 and 0.94 from 2020 to 2022, indicating a consistent effective tax rate during this period. A decline to 0.63 in 2024 suggests a significantly lower tax expense relative to earnings before tax in that year, followed by a recovery to 0.88 in 2025.

Interest Burden

This ratio shows a small upward trend from 0.94 in 2020 to 0.98 in 2022, reflecting a slight improvement in the company’s ability to cover interest expenses from operating income. The sharp decline to 0.69 in 2024 implies increased interest expenses or reduced operating income, with a subsequent recovery to 0.95 in 2025.

EBIT Margin

The EBIT margin exhibits strong growth from 14.75% in 2020 to 31.74% in 2022, indicating improving operational profitability. However, there is a drastic deterioration in 2023 with a negative margin of -33.9%, signaling significant operating losses. The margin rebounds to 7.13% in 2024 and improves substantially to 27.13% in 2025, showing recovery and resumed profitability.

Asset Turnover

Asset turnover, a measure of efficiency in generating sales from assets, rises moderately from 0.40 in 2020 to 0.47 in 2021, remaining stable at 0.46 in 2022. It declines sharply to 0.24 in 2023, indicating reduced asset utilization. The ratio then improves gradually to 0.36 in 2024 and 0.45 in 2025, suggesting restoration of asset efficiency.

Financial Leverage

Financial leverage remains fairly consistent between 1.33 and 1.38 from 2020 through 2022, followed by an increase to 1.46 in 2023 and further to approximately 1.54 in 2024 and 1.53 in 2025. This indicates a higher reliance on debt relative to equity in the later periods.

Return on Equity (ROE)

ROE more than doubles from 6.89% in 2020 to 17.41% in 2022, reflecting growing profitability and efficient equity usage. It turns negative at -13.22% in 2023, consistent with the negative EBIT margin that year. ROE then recovers to a low positive 1.72% in 2024 and reaches 15.76% in 2025, demonstrating a significant return improvement.

Net Profit Margin

The net profit margin exhibited considerable variability over the periods analyzed. Initially, there was a marked improvement from 12.54% to 28.24% over three years, indicating increasing profitability relative to revenue. However, this trend reversed sharply in the subsequent year with a significant negative margin of -37.54%, signaling a substantial loss. The margin recovered thereafter, reaching 22.84% by the most recent period. This pattern suggests episodic challenges affecting profitability, followed by a strong rebound in the latest period.

Asset Turnover

The asset turnover ratio demonstrated a generally stable but slightly fluctuating pattern. Starting at 0.40, it increased moderately to 0.47 and remained fairly consistent around this level until a decline to 0.24 was observed in the fourth period. This drop may indicate reduced efficiency in generating revenue from assets during that year. The ratio then improved to 0.45 by the final period, closely approaching its prior peak, suggesting a recovery in asset utilization efficiency.

Return on Assets (ROA)

The return on assets followed a trajectory similar to the net profit margin, reflecting profitability relative to total assets. There was a steady rise from 5.01% to 13.11% over three years, implying enhanced asset profitability. A significant downturn followed, with ROA turning negative to -9.08%, congruent with the negative net profit margin period. The ratio then rebounded to 10.31% in the latest period, indicating a restoration of asset profitability.

Overall Analysis

The financial data reveal cyclical performance with initial growth in profitability and asset efficiency, followed by a pronounced decline coinciding with a loss-making period. The subsequent recovery across all three metrics demonstrates resilience and a return to more favorable operating conditions. Nevertheless, the volatility in key profitability measures points to underlying risks or external factors impacting performance. Continuous monitoring of these metrics would be essential to assess stability and inform strategic decision-making.

The financial data exhibits notable fluctuations across several key metrics over the reported periods, revealing periods of both growth and contraction.

Tax Burden

The tax burden ratio remained relatively stable from 2020 through 2022, fluctuating narrowly between 0.91 and 0.94. However, there is a significant decline observed in the year 2024, dropping to 0.63, before recovering to 0.88 in 2025. This suggests variations in the tax expenses relative to pre-tax income, with a notable reduction in tax impact in 2024.

Interest Burden

The interest burden ratio shows an increasing trend from 0.94 in 2020 to 0.98 in 2022, indicating improved operating income relative to earnings before interest and taxes during these years. In 2024, this ratio decreases markedly to 0.69, indicating higher interest expenses or lower EBIT relative to earnings before interest and taxes. The ratio rebounds to 0.95 by 2025, indicating more favorable interest cost management or improved earnings.

EBIT Margin

The EBIT margin demonstrates strong growth from 14.75% in 2020 to a peak of 31.74% in 2022, reflecting improved operational efficiency and profitability. This is followed by a substantial decline to a negative margin of -33.9% in 2023, representing a significant operational loss. A recovery is seen in subsequent years, with the margin improving to 7.13% in 2024 and further to 27.13% in 2025, indicating a return toward profitable operations.

Asset Turnover

Asset turnover increases modestly from 0.40 in 2020 to 0.47 in 2021, then slightly declines to 0.46 in 2022. A sharp decline occurs in 2023 to 0.24, suggesting reduced efficiency in using assets to generate revenue. This metric improves in 2024 to 0.36 and further to 0.45 in 2025, indicating a recovering utilization of assets for sales generation.

Return on Assets (ROA)

The ROA follows a rising trend from 5.01% in 2020 to 13.11% in 2022, reflecting increasing profitability relative to asset base. In 2023, ROA turns negative (-9.08%), aligning with the observed negative EBIT margin, indicating a loss-making year. Subsequent recovery is evident, with ROA reaching 1.12% in 2024 and further improving to 10.31% in 2025, illustrating restoration of profitability and asset efficiency.

Overall, the data reveals a period of strong financial performance through 2022, interrupted by a sharp downturn in 2023 affecting profitability and asset utilization. The years following show a steady recovery trend, with improvements in operational margins, asset turnover, and profitability ratios, though not yet consistently reaching prior peak levels in some cases.

Tax Burden Ratio

The tax burden ratio remained relatively stable from 2020 through 2022, fluctuating slightly between 0.91 and 0.94. However, a noticeable decline is observed in 2024, dropping to 0.63, before recovering to 0.88 in 2025. This pattern suggests a temporary reduction in the effective tax rate impacting profitability in 2024, followed by a partial normalization in the subsequent year.

Interest Burden Ratio

This ratio showed a gradual increase from 0.94 in 2020 to a peak of 0.98 in 2022, indicating improved earnings before interest and taxes (EBIT) relative to earnings before taxes. The ratio then fell sharply to 0.69 in 2024 but rebounded to 0.95 in 2025. This volatility reflects fluctuations in interest expenses or earnings that affect profitability before tax obligations.

EBIT Margin

The EBIT margin experienced significant growth from 14.75% in 2020 to a peak of 31.74% in 2022, indicating improving operational efficiency or pricing power. However, a drastic deterioration occurred in 2023, with the margin plunging to -33.9%, reflecting a substantial operational loss during that period. Recovery is evident in 2024 and 2025, with positive margins of 7.13% and 27.13% respectively, though the 2024 figure remains considerably lower than earlier years.

Net Profit Margin

The net profit margin followed a similar trajectory to the EBIT margin, rising from 12.54% in 2020 to 28.24% in 2022, signifying strong profitability growth. Like the EBIT margin, it suffered a severe decline in 2023, falling to -37.54%, indicating net losses. This was followed by a recovery trend with margins of 3.1% in 2024 and 22.84% in 2025, demonstrating a return to profitability but with lingering impacts evident in 2024.