Super Micro Computer Inc. (NASDAQ:SMCI)

Return on Assets (ROA)

The Return on Assets exhibits an overall upward trend from June 2020 through June 2023, rising from 4.39% to a peak of 17.42%. Following this peak, there is a decline over the subsequent two years, with ROA decreasing to 11.73% in 2024 and further to 7.48% by June 2025. This pattern indicates an improvement in asset efficiency initially, followed by a reduction in profitability relative to total assets in the later periods.

Financial Leverage

Financial Leverage increased steadily from 1.80 in June 2020 to 2.25 in June 2022, suggesting a growing reliance on debt financing or increased asset base relative to equity. However, the ratio then declines to 1.86 in 2023 and remains relatively stable around 1.81 in 2024 before rising again to 2.22 in June 2025. This demonstrates some fluctuations in the company’s capital structure over the period, with leverage peaking twice, once in 2022 and again in 2025.

Return on Equity (ROE)

Return on Equity shows significant growth from 7.91% in 2020 to a substantial peak of 32.45% in 2023. After this high point, ROE decreases to 21.28% in 2024 and further to 16.64% in 2025. This trend parallels the ROA pattern but shows a more pronounced increase and sharper decline, reflecting enhanced profitability linked to equity during the middle years followed by a retreat in the later years. The magnitude of ROE changes relative to ROA and financial leverage suggests effective use of leverage to amplify returns, although the decreasing trend post-peak indicates reduced efficiency or profitability challenges.

The data presents key financial ratios over a six-year period, illustrating various trends in profitability, efficiency, leverage, and overall return.

Net Profit Margin

The net profit margin exhibits an overall upward trend from 2.52% in 2020 to a peak of 8.98% in 2023. After this peak, a declining trend emerges, with the margin falling to 7.69% in 2024 and further to 4.77% in 2025. This pattern suggests improved profitability until 2023, followed by a reduction in profit efficiency relative to sales.

Asset Turnover

Asset turnover shows slight variability with a decline from 1.74 in 2020 to 1.59 in 2021, followed by a moderate increase to 1.62 in 2022 and a notable rise to 1.94 in 2023. Subsequently, it decreases again to 1.53 in 2024 before a minor uptick to 1.57 in 2025. This indicates fluctuations in the efficiency of asset utilization for generating revenue, with a peak in 2023.

Financial Leverage

Financial leverage increases from 1.8 in 2020 to 2.25 in 2022, showing greater use of debt relative to equity. It then declines sharply to 1.86 in 2023 and remains relatively stable around 1.81 in 2024 before rising again to 2.22 in 2025. This suggests a varying capital structure strategy, with phases of increased leverage followed by deleveraging and then another increase.

Return on Equity (ROE)

ROE demonstrates strong growth, doubling from 7.91% in 2020 to 20% in 2022, and surging further to 32.45% in 2023. After reaching this high point, ROE declines to 21.28% in 2024 and 16.64% in 2025, reflecting a reduction in shareholder returns after the peak year. This trend generally mirrors net profit margin movements, with the highest efficiency and profitability coinciding with elevated equity returns.

In summary, the financial ratios reveal that the company experienced significant improvements in profitability and returns up to 2023, with peaks in net profit margin and ROE driven by increased asset turnover and leverage. However, the periods 2024 and 2025 show a reversal of these trends, with declines in profitability and return metrics, accompanied by fluctuating asset efficiency and financial leverage levels, indicating changing operational and capital strategies.

Tax Burden

The tax burden ratio exhibits some fluctuations over the periods, starting at 0.97 in 2020 and declining to its lowest point of 0.84 in 2022. It then increases again to 0.95 in 2024 before slightly decreasing to 0.87 in 2025, indicating variability in tax expense relative to pre-tax income.

Interest Burden

The interest burden remains relatively stable across the years, with values consistently around 0.95 to 0.99. This implies a steady interest expense level relative to operating income, with a slight downward trend in 2025 (0.95) suggesting a modest increase in interest costs or a decrease in operating income.

EBIT Margin

EBIT margin shows a clear increasing trend from 2.68% in 2020 up to 10.69% in 2023, indicating improving operational profitability. After peaking in 2023, it declines to 8.24% in 2024 and further to 5.76% in 2025, reflecting some pressure on earnings before interest and taxes in the latest periods.

Asset Turnover

The asset turnover ratio has minor volatility. It decreases from 1.74 in 2020 to 1.59 in 2021 and remains almost flat through 2022 with a slight rise to 1.94 in 2023. Following this peak, it drops to 1.53 in 2024 and slightly increases to 1.57 in 2025. This pattern suggests fluctuating efficiency in utilizing assets to generate revenue, with a notable but brief improvement in 2023.

Financial Leverage

Financial leverage increases from 1.8 in 2020 to a peak of 2.25 in 2022, indicating a higher reliance on debt or other liabilities to finance assets. It then decreases substantially to 1.86 in 2023 and remains near that level in 2024 before rising again to 2.22 in 2025, suggesting variable leverage management over the periods.

Return on Equity (ROE)

ROE demonstrates a strong upward trajectory from 7.91% in 2020 to a peak of 32.45% in 2023, reflecting significant gains in profitability and capital efficiency. However, it declines to 21.28% in 2024 and further to 16.64% in 2025, evidencing a reduction in shareholders’ return in the most recent years while still maintaining a higher level than the initial periods.

Net Profit Margin

The net profit margin demonstrated an overall upward trend from 2.52% in mid-2020, peaking at 8.98% in mid-2023. However, it experienced a decline thereafter, falling to 7.69% in mid-2024 and further to 4.77% by mid-2025. This pattern suggests initially improving profitability, followed by a reduction in profit efficiency in the most recent periods.

Asset Turnover

The asset turnover ratio showed fluctuations over the analyzed period. It decreased from 1.74 in mid-2020 to 1.59 in mid-2021, slightly increased to 1.62 in mid-2022, and reached a peak at 1.94 in mid-2023. Subsequently, it declined again to 1.53 in mid-2024 and exhibited a minor rebound to 1.57 in mid-2025. This indicates variability in the efficiency of asset usage to generate sales, with the best performance recorded in 2023.

Return on Assets (ROA)

The return on assets displayed a consistent upward trend from 4.39% in mid-2020 to a significant peak of 17.42% in mid-2023. Following this peak, ROA decreased to 11.73% in mid-2024 and further to 7.48% by mid-2025. The trend parallels that of the net profit margin, reflecting strong profitability and asset utilization up to 2023, with a subsequent decline in returns.

Tax Burden

The tax burden ratio experienced fluctuations over the years. It declined from 0.97 in mid-2020 to its lowest point of 0.84 in mid-2022, indicating a reduction in the proportion of income paid as tax during that period. Subsequently, it increased sharply to 0.95 by mid-2024 before decreasing again to 0.87 in mid-2025. These movements suggest variability in effective tax rates impacting net profitability.

Interest Burden

The interest burden remained relatively stable throughout the periods, maintaining levels close to 0.98 or higher, with a slight dip to 0.95 in mid-2025. This consistency indicates that interest expenses have had a minor and stable impact on earnings before tax, with limited changes in financing costs or debt servicing over time.

EBIT Margin

The EBIT margin showed a strong upward trend from 2.68% in mid-2020 to a peak of 10.69% in mid-2023, reflecting improved operating profitability. However, after this peak, the margin declined to 8.24% in mid-2024 and further to 5.76% in mid-2025, signaling a reduction in operational efficiency or rising costs relative to revenue.

Asset Turnover

Asset turnover demonstrated some volatility. It decreased from 1.74 in mid-2020 to 1.59 in mid-2021 but then gradually recovered to 1.94 by mid-2023, indicating increased efficiency in generating sales from assets at that point. Nevertheless, it fell again to 1.53 in mid-2024 and slightly rose to 1.57 in mid-2025, suggesting challenges in sustaining asset utilization rates.

Return on Assets (ROA)

ROA exhibited a significant improvement from 4.39% in mid-2020 to a peak of 17.42% in mid-2023, driven by gains in both asset utilization and operating margins. After this peak, ROA declined to 11.73% in mid-2024 and further fell to 7.48% in mid-2025, reflecting the combined effects of decreasing EBIT margin and asset turnover on overall profitability.

Tax Burden

The tax burden ratio demonstrates a fluctuating trend over the observed periods. Starting at 0.97 in mid-2020, it declined significantly to 0.84 by mid-2022, indicating a period of reduced tax impact on earnings. Subsequently, the ratio increased again to 0.95 by mid-2024 before a slight decrease to 0.87 in mid-2025, suggesting variability in the effective tax rate affecting net profitability.

Interest Burden

The interest burden ratio remains relatively stable throughout the periods, consistently around 0.98 to 0.99 until mid-2024. A minor decline to 0.95 by mid-2025 indicates a slight increase in interest expenses relative to EBIT, but overall the burden from interest costs stays low, reflecting effective management of debt-related expenses.

EBIT Margin

The EBIT margin shows a strong upward trajectory from 2.68% in mid-2020 to a peak of 10.69% in mid-2023, indicating improved operational profitability. However, after this peak, the margin decreased to 8.24% in mid-2024 and further to 5.76% in mid-2025, signaling a reduction in earnings before interest and taxes relative to revenue in the most recent years.

Net Profit Margin

The net profit margin follows a similar pattern to the EBIT margin, rising from 2.52% in mid-2020 to a high of 8.98% in mid-2023. Thereafter, it declined to 7.69% in mid-2024 and further dropped to 4.77% in mid-2025. This downward trend suggests that despite earlier improvements, overall profitability after all expenses and taxes has diminished recently, though it remains above the levels recorded at the beginning of the period.