Paramount Global (NASDAQ:PARA)

Return on Assets (ROA)

The return on assets exhibits a declining trend from 8.97% in 2018 to 1.89% in 2022, with a notable dip in 2020 at 4.6%. There is a partial recovery in 2021 reaching 7.75%, followed by a sharp decrease in 2022.

Financial Leverage

Financial leverage shows a consistent downward trajectory, decreasing significantly from a high of 7.8 ratio in 2018 to 2.53 in 2022. The largest reduction occurred between 2018 and 2019, after which the decline continued but at a slower pace.

Return on Equity (ROE)

Return on equity decreases substantially over the period, starting at 69.9% in 2018 and falling to 4.79% in 2022. The most pronounced decrease is between 2018 and 2019, with a gradual decline thereafter. The figures indicate a reduction in profitability for equity holders, consistent with trends observed in ROA and financial leverage.

The analysis of the financial ratios over the five-year period reveals notable shifts in profitability, efficiency, leverage, and overall return to equity holders.

Net Profit Margin

The net profit margin has shown considerable variability across the years. Starting from 13.5% in 2018, it experienced a gradual decline reaching its lowest at 9.58% in 2020. However, a significant improvement was observed in 2021, with the margin surging to 15.89%, before sharply falling to 3.66% in 2022. This indicates fluctuating profitability levels, with a marked downturn in the most recent year.

Asset Turnover

The asset turnover ratio has exhibited a general downward trend over the period. From 0.66 in 2018, it decreased steadily to 0.48 by 2020, with minor improvement to 0.52 by 2022. This suggests a declining efficiency in the utilization of assets to generate sales, although a slight recovery is noted in the last recorded year.

Financial Leverage

Financial leverage significantly decreased from a high of 7.8 in 2018 to 2.53 in 2022. The steepest reduction occurred between 2018 and 2019, after which the ratio continued to decline more gradually. This trend implies a deliberate effort to reduce reliance on debt financing and potentially lower financial risk.

Return on Equity (ROE)

The ROE ratio mirrored the volatility seen in profitability metrics. It was exceptionally high at 69.9% in 2018, then declined sharply to 25.05% in 2019 and further to 15.76% in 2020. A recovery was observed in 2021 at 20.28%, but this was followed by a significant drop to 4.79% in 2022. The pattern reflects both the effects of changing profit margins and leverage adjustments on shareholder returns.

Overall, the data reveals a period marked by decreasing operational efficiency and financial leverage, alongside fluctuating profitability and shareholder returns. The sharp declines in net profit margin and ROE in 2022 might warrant further investigation into underlying causes affecting profitability and equity returns.

Tax Burden

The tax burden ratio fluctuates over the years, starting at 0.88 in 2018, peaking at 1.00 in 2019, and then declining to 0.83 by the end of 2022. This indicates variability in the effective tax rate impacting the company’s profitability.

Interest Burden

The interest burden ratio shows a downward trend from 0.83 in 2018 to 0.59 in 2022, suggesting an overall reduction in interest expenses relative to earnings before interest and taxes, which could imply improved debt management or lower interest costs.

EBIT Margin

The EBIT margin displays considerable volatility. It decreases from 18.6% in 2018 to a low of 15.32% in 2019, slightly recovers until 2021 with a peak of 21.6%, then sharply falls to 7.5% in 2022. This pattern suggests fluctuating operational efficiency and profitability over the period.

Asset Turnover

Asset turnover consistently declines from 0.66 in 2018 to 0.48 in 2020, followed by a minor recovery to 0.52 by 2022. This implies a deterioration in the efficiency of asset utilization to generate revenue, although showing signs of slight improvement in recent years.

Financial Leverage

Financial leverage decreases markedly from a high of 7.8 in 2018 to 2.53 in 2022, indicating a significant reduction in reliance on debt financing. This shift may reflect a strategic move towards a more conservative capital structure.

Return on Equity (ROE)

ROE experiences a steep decline from an exceptionally high 69.9% in 2018 to 4.79% in 2022. The reduction in ROE is likely influenced by the lower EBIT margin, reduced financial leverage, and operational challenges, indicating diminished profitability and returns for shareholders.

Net Profit Margin

The net profit margin demonstrates a fluctuating pattern over the five-year period. It starts at 13.5% in 2018 and decreases steadily to 9.58% in 2020. A notable recovery occurs in 2021 where the margin peaks at 15.89%, followed by a sharp decline to 3.66% in 2022. This indicates an inconsistent profitability trend with significant volatility in recent years.

Asset Turnover

Asset turnover exhibits a downward trend from 0.66 in 2018 to 0.48 in 2020, reflecting a decreasing efficiency in using assets to generate revenue. There is a slight improvement in 2021 to 0.49, continuing with a modest increase to 0.52 in 2022. Overall, the asset utilization shows a decline initially but begins to recover marginally towards the end of the period.

Return on Assets (ROA)

Return on Assets follows a similar pattern to net profit margin, starting at 8.97% in 2018 and declining to 4.6% by 2020. It then rebounds to 7.75% in 2021, before dropping sharply to 1.89% in 2022. This indicates reduced overall profitability from the company’s asset base, culminating in a notably low return in the most recent year.

Tax Burden

The tax burden ratio fluctuated over the five-year period, starting at 0.88 in 2018, reaching a peak of 1.00 in 2019, before declining to 0.82 in 2020. It showed partial recovery to 0.88 in 2021 but decreased again to 0.83 in 2022. This indicates variability in the effective tax rate, with 2019 standing out as an outlier with no apparent tax burden.

Interest Burden

The interest burden ratio demonstrated a declining trend from 0.83 in 2018 to 0.59 in 2022, with the lowest point recorded in the final year. After a dip to 0.74 in 2020, it briefly recovered to 0.84 in 2021 before declining sharply in 2022. This pattern suggests increasing interest expenses relative to earnings before interest and taxes over time, impacting profitability.

EBIT Margin

The EBIT margin exhibited volatility, starting at 18.6% in 2018 and declining to 15.32% in 2019, followed by a minor increase to 15.77% in 2020. A significant improvement occurred in 2021, with the margin reaching 21.6%. However, this was followed by a steep decline to 7.5% in 2022, indicating considerable fluctuations in operating profitability.

Asset Turnover

Asset turnover ratio showed a decreasing trend from 0.66 in 2018 to 0.48 in 2020, indicating reduced efficiency in utilizing assets to generate revenue. A slight increase to 0.49 occurred in 2021 and 0.52 in 2022, suggesting some recovery in asset utilization, though still below the 2018 level.

Return on Assets (ROA)

ROA declined steadily from 8.97% in 2018 to 4.6% in 2020, underscoring a reduction in the company's overall profitability relative to its asset base. There was a noticeable recovery to 7.75% in 2021, but ROA fell significantly to 1.89% in 2022, reflecting diminished efficiency in asset-generated profits in the latest period.

The financial ratios over the five-year period demonstrate notable fluctuations in profitability and burden metrics. The tax burden ratio shows variability, starting at 0.88 in 2018, reaching a peak of 1.00 in 2019, and subsequently declining to 0.83 by 2022. This indicates changes in the effective tax rate impacting net profitability.

The interest burden ratio reveals a declining trend, decreasing from 0.83 in 2018 to 0.59 in 2022, with a modest increase observed in 2021. This suggests that the company’s earnings before interest and taxes are increasingly impacted by interest expenses, indicating rising interest costs or leverage over time.

Profitability margins exhibit significant variation. The EBIT margin decreased from 18.6% in 2018 to 15.32% in 2019 and stayed relatively stable in 2020 before increasing sharply to 21.6% in 2021. However, in 2022, it dropped drastically to 7.5%, signaling a substantial reduction in operational profitability during the latest period.

Similarly, the net profit margin follows a generally downward trend, starting at 13.5% in 2018, declining to 9.58% in 2020 before rising to 15.89% in 2021. The margin then falls sharply to 3.66% in 2022, indicating a significant deterioration in net earnings relative to revenue in the most recent year.

Tax Burden Ratio

Varied over the years, with an initial increase to 1.00 in 2019 followed by a decrease to 0.83 in 2022, implying fluctuating tax impacts.

Interest Burden Ratio

Declined steadily from 0.83 in 2018 to 0.59 in 2022, suggesting increasing interest expenses or financial leverage.

EBIT Margin

Experienced a sharp rise in 2021 but a significant drop in 2022 to 7.5%, indicating unstable operating profitability.

Net Profit Margin

Followed a similar pattern as EBIT margin with a peak in 2021 and a pronounced decline in 2022 to 3.66%, reflecting reduced overall profitability.