Analysis of Investments
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- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Synopsys Inc., adjustment to net income attributed to Synopsys
US$ in thousands
Based on: 10-K (reporting date: 2025-10-31), 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31).
Reported net income attributed to Synopsys demonstrates a consistent upward trend from 2020 through 2024, followed by a decrease in 2025. Adjusted net income exhibits a similar pattern, closely mirroring the reported net income figures. The differences between reported and adjusted net income are relatively small across the observed period, suggesting the impact of the adjustment related to mark-to-market changes in available-for-sale securities is generally limited.
- Overall Trend
- Both reported and adjusted net income increased substantially between 2020 and 2024. Reported net income grew from US$664.347 million to US$2,263.380 million, while adjusted net income increased from US$664.347 million to US$2,264.840 million. A notable decline is then observed in 2025, with reported net income decreasing to US$1,332.220 million and adjusted net income decreasing to US$1,332.047 million.
- Adjustment Impact
- The adjustment to net income, stemming from mark-to-market changes in available-for-sale securities, is consistently minor. In 2020, the adjustment was negligible. In 2021, the adjustment reduced net income by US$246 thousand. In 2022, the adjustment reduced net income by US$2,353 thousand. In 2023, the adjustment increased net income by US$1,513 thousand. In 2024, the adjustment increased net income by US$1,460 thousand. In 2025, the adjustment increased net income by US$173 thousand. This indicates that fluctuations in the fair value of available-for-sale securities have a limited effect on the overall reported profitability.
The close alignment between reported and adjusted net income suggests that the mark-to-market adjustments for available-for-sale securities do not materially alter the overall financial performance picture. However, the decrease in both reported and adjusted net income in 2025 warrants further investigation to determine the underlying causes of this decline.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Synopsys Inc., adjusted profitability ratios
Based on: 10-K (reporting date: 2025-10-31), 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31).
The profitability ratios demonstrate a period of consistent growth followed by a significant shift in the most recent reporting periods. From 2020 through 2023, reported and adjusted profitability metrics generally increased. However, 2024 shows a substantial peak in reported and adjusted net profit margin, while 2025 experiences a marked decline across all reported ratios.
- Net Profit Margin
- Reported and adjusted net profit margins remained relatively stable between 2020 and 2023, fluctuating between approximately 18% and 21%. A considerable increase is observed in 2024, reaching 36.94% for both reported and adjusted values. This is followed by a substantial decrease in 2025, falling to 18.89% for both reported and adjusted metrics. The consistency between reported and adjusted values suggests that mark-to-market adjustments on available-for-sale securities have a limited impact on this metric.
- Return on Equity (ROE)
- Similar to the net profit margin, reported and adjusted ROE exhibited growth from 2020 to 2023, increasing from around 13.5% to approximately 20%. The 2024 value reached a high of 25.17% and 25.19% for reported and adjusted ROE, respectively. A dramatic decline is then evident in 2025, with both reported and adjusted ROE falling to 4.70%. This suggests a significant change in the relationship between net income and shareholder equity.
- Return on Assets (ROA)
- Reported and adjusted ROA followed a comparable trend to ROE and net profit margin. A steady increase was observed from 2020 to 2023, moving from approximately 8.3% to around 11.9%. The 2024 value peaked at 17.31% and 17.32% for reported and adjusted ROA, respectively. A substantial decrease occurred in 2025, with both reported and adjusted ROA dropping to 2.76%. This indicates a significant change in the efficiency with which assets are being used to generate profits.
The near-identical values for reported and adjusted ratios across all years indicate that fluctuations in the fair value of available-for-sale securities do not materially affect the reported profitability metrics. The pronounced increase in profitability in 2024, followed by a sharp decline in 2025, warrants further investigation to determine the underlying drivers of these changes. The substantial drop in 2025 across all ratios suggests a potentially significant event or shift in business operations impacting overall profitability.
Synopsys Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2025-10-31), 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31).
2025 Calculations
1 Net profit margin = 100 × Net income attributed to Synopsys ÷ Revenue
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income attributed to Synopsys ÷ Revenue
= 100 × ÷ =
The adjusted net profit margin exhibited a generally positive trend from 2020 through 2024, followed by a substantial decrease in 2025. Reported net income and adjusted net income figures are nearly identical across all periods, indicating minimal adjustments were made to reported earnings. The reported net profit margin mirrors the adjusted net profit margin trend closely.
- Adjusted Net Profit Margin Trend (2020-2024)
- From 2020 to 2024, the adjusted net profit margin increased steadily. It began at 18.01% in 2020 and rose to 21.08% in 2021, 19.33% in 2022, and peaked at 36.96% in 2024. This represents a significant improvement in profitability over the four-year period.
- Adjusted Net Profit Margin (2025)
- In 2025, the adjusted net profit margin experienced a considerable decline, falling to 18.88%. This represents a decrease of approximately 49% from the 2024 value. This shift warrants further investigation to determine the underlying causes, such as changes in cost structure, revenue recognition, or one-time events.
- Relationship between Reported and Adjusted Margins
- The difference between the reported and adjusted net profit margins is consistently minimal throughout the observed period, generally less than 0.03%. This suggests that adjustments made to net income have a limited impact on the overall profitability picture. The consistency in these figures indicates a stable approach to earnings adjustments.
- Overall Profitability
- Despite the 2025 decline, the adjusted net profit margin generally demonstrates strong profitability. The values consistently remain above 18% for most of the period, indicating a healthy ability to convert revenue into profit. The peak in 2024 suggests a period of exceptional operational efficiency or favorable market conditions.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2025-10-31), 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31).
2025 Calculations
1 ROE = 100 × Net income attributed to Synopsys ÷ Total Synopsys stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income attributed to Synopsys ÷ Total Synopsys stockholders’ equity
= 100 × ÷ =
The reported and adjusted net income attributed to Synopsys demonstrates a generally increasing trend from 2020 through 2024, followed by a substantial decrease in 2025. Both reported and adjusted net income figures are nearly identical across all years, indicating minimal adjustments are being made to reported earnings. Correspondingly, both reported and adjusted return on equity (ROE) exhibit similar patterns over the observed period.
- ROE Trend (2020-2024)
- From 2020 to 2024, both reported and adjusted ROE consistently increased. Starting at 13.54% in 2020, ROE rose to 14.31% in 2021, 17.85% in 2022, and peaked at 25.17% and 25.19% respectively in 2024. This sustained growth suggests improving profitability relative to shareholder equity during this timeframe.
- ROE Trend (2025)
- A significant decline in ROE is observed in 2025, falling to 4.70% for both reported and adjusted metrics. This decrease aligns with the substantial reduction in net income during the same period, suggesting a considerable decrease in profitability relative to equity.
- Adjustments to Net Income
- The difference between reported and adjusted net income is consistently minimal throughout the period. This indicates that adjustments made to reported net income are not materially impacting the overall ROE calculation. The adjustments appear to be consistently applied, with a negligible effect on the final ROE figures.
- Overall Observations
- The period from 2020 to 2024 demonstrates a strong positive trend in profitability as measured by ROE. However, the sharp decline in both net income and ROE in 2025 warrants further investigation to understand the underlying causes of this performance shift. The consistency between reported and adjusted ROE suggests the core drivers of the observed trends are reflected in the initially reported earnings.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2025-10-31), 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31).
2025 Calculations
1 ROA = 100 × Net income attributed to Synopsys ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income attributed to Synopsys ÷ Total assets
= 100 × ÷ =
The reported and adjusted net income attributed to Synopsys demonstrates a generally increasing trend from 2020 through 2024, followed by a substantial decrease in 2025. Both reported and adjusted net income figures are nearly identical across all years, indicating minimal adjustments are being made to reported earnings. Correspondingly, both reported and adjusted Return on Assets (ROA) exhibit similar patterns over the observed period.
- ROA Trend (2020-2025)
- From 2020 to 2024, both reported and adjusted ROA consistently increased. Starting at 8.27% in 2020, ROA rose to a peak of 17.31% and 17.32% respectively in 2024. However, a significant decline is observed in 2025, with both reported and adjusted ROA falling to 2.76%.
- ROA Consistency
- The reported and adjusted ROA values are remarkably close throughout the period. The difference between the two metrics is consistently less than 0.02%, suggesting that the adjustments made to net income have a negligible impact on the overall ROA calculation. This indicates a high degree of alignment between reported earnings and the adjustments applied.
- 2025 Performance
- The substantial decrease in ROA during 2025 warrants further investigation. This decline coincides with a significant reduction in both reported and adjusted net income. The cause of this income reduction, and its impact on asset utilization, should be examined to understand the drivers behind the diminished ROA.
Overall, the period from 2020 to 2024 demonstrates improving profitability relative to assets. However, the sharp downturn in 2025 signals a potential shift in performance that requires detailed scrutiny.