Synopsys Inc. (NASDAQ:SNPS)

The analysis of the financial ratios over the six-year period reveals several trends and notable changes in the company's operational efficiency, liquidity, leverage, profitability, and returns.

Asset Turnover

The reported total asset turnover ratio declined from 0.52 in 2019 to 0.46 in 2020, then experienced a gradual increase peaking at 0.57 in 2023, before decreasing to 0.47 in 2024. The adjusted total asset turnover followed a different pattern, remaining stable around 0.51–0.53 from 2019 to 2021, increasing sharply to 0.63 in 2022, then slightly declining to 0.60 in 2023 and 0.52 in 2024. This suggests a short-term improvement in asset utilization adjusted for non-operating effects, with some volatility in subsequent years.

Current Ratio

The reported current ratio improved steadily from 0.99 in 2019 to values above 1.0 in following years, reaching a notable 2.44 in 2024, indicating increased short-term liquidity. The adjusted current ratio consistently stayed well above the reported values, ranging from 3.17 to 3.52 between 2019 and 2022, dipping to 2.87 in 2023, then surging to 5.18 in 2024. This pattern indicates strong adjusted liquidity levels, with a significant boost in 2024, which may reflect a conservative working capital management approach or changes in asset composition.

Debt to Equity and Debt to Capital

The reported debt to equity and debt to capital ratios were very low, falling to zero from 2022 onwards, indicating a de-leveraging or elimination of debt. Adjusted ratios demonstrate a slight decline over time, from 0.15 to 0.07, confirming the reduction in leverage on an adjusted basis. This points to a conservative capital structure with minimal reliance on debt financing during the period.

Financial Leverage

Reported financial leverage rose gradually from 1.57 in 2019 to a peak of 1.71 in 2022, then decreased to 1.45 in 2024. Adjusted financial leverage remained relatively stable, fluctuating between 1.24 and 1.33, without a clear upward or downward trend. The decrease in reported leverage toward the end of the period aligns with the reduction in reported debt levels, indicating a stronger equity base relative to assets.

Net Profit Margin

Reported net profit margin showed a steady increase from 15.84% in 2019 to 21.05% in 2023, followed by a sharp rise to 36.94% in 2024. Adjusted net profit margin was more volatile, peaking at 21.25% in 2022, then declining notably to 16.48% in 2023 and slightly increasing to 17.71% in 2024. The substantial jump in reported margins in 2024 suggests an unusual or non-recurring effect boosting profitability, while adjusted margins reflect a more normalized profit level.

Return on Equity (ROE)

Reported ROE increased from 13.04% in 2019 to 25.17% in 2024, with consistent growth especially after 2020. Adjusted ROE rose initially but declined from 16.68% in 2022 to 11.35% in 2024. The divergence between reported and adjusted ROE suggests that extraordinary items might have artificially inflated shareholder returns in the later years.

Return on Assets (ROA)

Reported ROA showed a steady upward trend from 8.31% in 2019 to 17.31% in 2024. Adjusted ROA increased until 2022 reaching 13.3%, then declined to 9.17% by 2024. The upward trend in reported ROA indicates improved asset profitability, but the adjusted figures imply that core operational returns may have weakened recently.

In summary, the company appears to maintain strong liquidity positions, reduce financial leverage, and improve certain profitability metrics on a reported basis. However, adjusted ratios reveal more variability and a recent softening in profitability and returns, highlighting the importance of considering adjustments to gain a clearer picture of ongoing operational performance. The sharp divergence in 2024 between reported and adjusted margins and returns warrants further investigation to understand the underlying causes.

The financial data indicates a consistent increase in revenue over the observed periods. Starting from 3,360,694 thousand US dollars in 2019, revenue grew steadily each year, reaching 6,127,436 thousand US dollars by 2024. This upward trend suggests sustained sales growth and market expansion.

Total assets have also shown a marked increase, rising from 6,405,160 thousand US dollars in 2019 to 13,073,561 thousand US dollars in 2024. This growth reflects significant asset accumulation, possibly through investments or acquisitions, contributing to an expanded operational capacity.

Looking at the reported total asset turnover ratio, which measures revenue generated per unit of asset, the data reveals some variability. The ratio decreased from 0.52 in 2019 to 0.46 in 2020, then exhibited moderate fluctuations before reaching 0.47 in 2024. This suggests that while assets have been growing, efficiency in utilizing those assets to generate revenue has not improved substantially and may have slightly declined towards the end of the period.

Adjusted revenue figures, which may account for non-recurring or extraordinary items, present a similar growth pattern to reported revenue, increasing from 3,393,551 thousand US dollars in 2019 to 6,149,716 thousand US dollars in 2024. The adjustment provides a slightly higher baseline, indicating underlying organic growth in revenue streams.

Adjusted total assets follow a slightly different pattern compared to reported assets, starting at 6,646,676 thousand US dollars in 2019 and increasing to 11,877,311 thousand US dollars in 2024. This adjusted figure grows at a slower rate than reported total assets, implying the exclusion of certain asset components that may have inflated the reported totals.

The adjusted total asset turnover ratio demonstrates a generally more favorable trend than the reported ratio. Beginning at 0.51 in 2019, it remains stable through 2020 and 2021, then rises to a peak of 0.63 in 2022 before settling around 0.52 in 2024. This trend indicates improved efficiency in asset utilization during the mid-period, followed by a modest decline but remaining near initial levels.

Overall, the data suggests robust revenue growth alongside steady asset growth. While both reported and adjusted asset turnover ratios reveal that efficiency gains in asset utilization have been limited and somewhat inconsistent, the adjusted figures imply better efficiency in certain periods compared to the reported data. Continuous monitoring of asset deployment and turnover efficiency would be advisable to ensure sustained profitable growth.

The financial data reveals notable trends in both liquidity and the management of current assets and liabilities over the six-year period.

Current Assets

The current assets show a consistent upward trajectory from 1,738,917 thousand USD in 2019 to 6,469,666 thousand USD in 2024. This represents a strong growth, especially pronounced in the final year, where the assets nearly double compared to the previous year.

Current Liabilities

Current liabilities increased steadily from 1,752,453 thousand USD in 2019 to a peak of 2,985,451 thousand USD in 2023, followed by a decline to 2,650,120 thousand USD in 2024. This suggests measures may have been taken to reduce short-term obligations after 2023.

Reported Current Ratio

The reported current ratio improved from just below unity at 0.99 in 2019 to a substantially higher 2.44 in 2024. Despite some fluctuations, the ratio consistently remained above 1.0 from 2020 onward, indicating enhanced short-term liquidity and the company's ability to cover current liabilities with current assets.

Adjusted Current Assets

Adjusted current assets also display a consistent increase, closely mirroring the trend in reported current assets, growing from 1,747,963 thousand USD in 2019 to 6,520,674 thousand USD in 2024. The adjusted values remain slightly higher than reported figures each year.

Adjusted Current Liabilities

Adjusted current liabilities increased from 539,977 thousand USD in 2019 to 1,258,383 thousand USD in 2024, more than doubling over the period. However, compared with reported current liabilities, these adjusted liabilities are significantly lower each year, reflecting adjustments possibly for non-operational or non-current items.

Adjusted Current Ratio

The adjusted current ratio remains markedly higher than the reported current ratio throughout the period, ranging from 3.24 in 2019 to a notable peak of 5.18 in 2024. Though there is some fluctuation, generally the ratio indicates strong liquidity, with ample coverage of adjusted current liabilities by adjusted current assets.

Overall, the data shows a strong improvement in liquidity measures, particularly when considering adjusted figures. The substantial asset growth combined with restrained increases in liabilities, especially after 2023, contributes to improved current ratios. This points to prudent working capital management and a growing buffer to meet short-term obligations.

The financial data indicate a consistent and notable evolution in both debt levels and equity over the analyzed periods.

Total Debt

The reported total debt demonstrates a significant decline from US$137.7 million in 2019 to approximately US$15.6 million in 2024, showing a reduction of nearly 89%. This sharp decrease suggests an aggressive debt repayment or restructuring strategy, leading to a minimal debt burden by the end of the period.

Total Stockholders' Equity

Equity exhibits a sustained upward trend, starting from around US$4.1 billion in 2019 and reaching nearly US$9.0 billion by 2024. This represents an increase of over 119%, pointing to robust retained earnings, capital infusions, or valuation growth, thereby strengthening the company’s capital base.

Reported Debt to Equity Ratio

The reported ratio remains very low throughout, declining from 0.03 in 2019 to effectively zero from 2022 onward. This indicates the company’s reported debt is marginal relative to its equity, underscoring a strong capitalization position with almost negligible leverage based on reported figures.

Adjusted Total Debt

Adjusted debt figures are substantially higher than reported debt but display moderate fluctuations across the period. Starting at approximately US$760.3 million in 2019, adjusted debt declines to around US$656.4 million in 2022, then slightly increases, remaining close to US$684.5 million in 2024. This suggests some underlying obligations or liabilities not captured in reported debt, which are managed with some degree of stability.

Adjusted Total Stockholders’ Equity

Adjusted equity follows a consistent upward trajectory, from roughly US$5.0 billion in 2019 to approximately US$9.6 billion in 2024, mirroring the trend seen in reported equity but at higher absolute levels, indicating adjustments for items such as comprehensive income or other equity-related factors.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio declines steadily from 0.15 in 2019 to 0.07 in 2024. This downward progression reflects improving capital structure efficiency and decreasing leverage risk when considering adjusted liabilities. The relatively modest leverage levels suggest prudent financial management aimed at maintaining balance sheet strength while possibly supporting growth initiatives.

Overall, the data reveal a company strengthening its equity base substantially while maintaining low leverage both on a reported and adjusted basis. The marked reduction in reported debt coupled with steadily rising equity underlines an emphasis on financial stability and solid capitalization. Meanwhile, the persistence of moderate adjusted debt levels suggests cautious management of additional obligations. The decreasing leverage ratios corroborate a trend towards enhanced financial resilience and lower risk exposure over the period analyzed.

Total Debt and Capital Structure

Over the analyzed periods, total debt demonstrates a consistent declining trend, falling from approximately 138 million US dollars in 2019 to about 16 million US dollars in 2024. This reduction is particularly significant between 2021 and 2022, where the total debt decreased sharply from 100 million to just over 20 million US dollars. Total capital, conversely, shows a steady increase over the same timeframe, rising from around 4.2 billion US dollars in 2019 to over 9 billion US dollars by 2024, indicating substantial growth in overall capital base.

Reported Debt to Capital Ratio

The reported debt to capital ratio remains very low throughout the years, initially recorded at 0.03 in 2019 and stabilizing at 0 from 2022 onwards. This suggests a minimal reliance on debt when considering reported figures, with debt representing an almost negligible portion of the capital structure in recent years.

Adjusted Debt and Capital Metrics

Adjusted total debt figures are significantly higher than reported total debt, starting at approximately 760 million US dollars in 2019 and slightly decreasing to around 684 million US dollars by 2024. Although there is a mild downward movement, adjusted debt remains relatively stable over time. Adjusted total capital also trends upward, increasing from about 5.8 billion US dollars in 2019 to over 10 billion US dollars in 2024, reflecting a growing capital base when adjustments are accounted for.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio exhibits a declining pattern, dropping from 0.13 in 2019 to 0.07 in 2024. This indicates a gradual reduction in leverage based on adjusted figures, suggesting an improving balance between debt and capital with a lower proportional debt load relative to adjusted capital over the years.

Summary of Financial Position Trends

The overall financial data indicates a firm with an expanding capital base accompanied by a decreasing or stable level of debt, whether measured by reported or adjusted figures. The low and decreasing debt to capital ratios further underline a conservative leverage policy, enhancing financial stability and potentially providing greater capacity for future financing or investment activities.

Total Assets

The total assets showed a consistent upward trend across the periods analyzed, increasing from 6,405,160 thousand US dollars in 2019 to 13,073,561 thousand US dollars in 2024. This reflects steady growth in asset base, with a notable acceleration in asset accumulation between 2023 and 2024.

Total Synopsys Stockholders’ Equity

Stockholders’ equity also increased over the years, from 4,083,013 thousand US dollars in 2019 to 8,990,702 thousand US dollars in 2024. The increase was relatively steady, though more pronounced between 2023 and 2024, indicating strengthened equity position towards the latter period.

Reported Financial Leverage

The reported financial leverage ratio fluctuated mildly but overall trended downward in the last recorded year, starting at 1.57 in 2019, peaking at 1.71 in 2022, and then declining to 1.45 by 2024. This suggests a reduction in reliance on debt relative to equity in the most recent year.

Adjusted Total Assets

Adjusted total assets displayed a similar growth pattern to total assets, rising from 6,646,676 thousand US dollars in 2019 to 11,877,311 thousand US dollars in 2024. The growth appears steady with a slight increase in the pace of growth toward 2024, though the adjusted figures are consistently lower than the reported total assets, reflecting adjustments made for more accurate asset valuation.

Adjusted Total Stockholders’ Equity

Adjusted equity rose from 5,011,859 thousand US dollars in 2019 to 9,596,081 thousand US dollars in 2024, showing steady growth each year. The difference between adjusted and reported equity narrows over time, indicating alignment between book equity and adjusted measures.

Adjusted Financial Leverage

The adjusted financial leverage ratio remained relatively stable throughout the period, ranging narrowly between 1.24 and 1.33. There was a slight decrease from 1.33 in 2019 to 1.24 in 2024, signaling improved capital structure and slightly reduced account of leverage impact when considering adjusted figures.

Revenue

Revenue demonstrates a consistent upward trajectory over the six-year period, increasing from approximately $3.36 billion in 2019 to around $6.13 billion in 2024. This growth indicates a sustained expansion in the company's sales and market presence, with particularly notable increases between 2020 and 2023.

Net Income Attributed to Synopsys

Net income shows a significant increase from about $532 million in 2019 to over $2.26 billion in 2024. This represents more than a fourfold growth, highlighting strong profitability improvements. The most pronounced jump is observed between 2023 and 2024, where net income almost doubles.

Reported Net Profit Margin

The reported net profit margin has improved steadily from 15.84% in 2019 to 36.94% in 2024. Margins remain relatively stable with slight year-to-year fluctuations until 2023, followed by a sharp increase in 2024, suggesting a considerable improvement in operational efficiency or other income-related factors maximizing profit relative to revenue.

Adjusted Revenue

Adjusted revenue follows a similar increasing trend as reported revenue, rising from approximately $3.39 billion in 2019 to around $6.15 billion in 2024. The growth is consistent, reflecting underlying revenue expansion after adjustments for non-recurring items or other accounting considerations.

Adjusted Net Income

Adjusted net income exhibits variability, initially rising from about $507 million in 2019 to $800 million in 2020, followed by a slight decline and fluctuations through subsequent years. The figure peaks at approximately $1.17 billion in 2022 but declines in 2023 before recovering to about $1.09 billion in 2024. This pattern indicates some volatility in adjusted profitability metrics over the period.

Adjusted Net Profit Margin

Adjusted net profit margin shows a fluctuating pattern: starting at 14.93% in 2019, it peaks at 21.25% in 2022, declines to 16.48% in 2023, and modestly increases to 17.71% in 2024. These variations suggest that profitability, after adjustments, has faced some pressures despite overall revenue growth, possibly due to cost changes or non-recurring adjustments impacting margins.

Overall Insights

The data reveals strong revenue and net income growth over the six-year period, emphasizing improved profitability and scale. However, the disparity between reported and adjusted net profit margins in recent years points to fluctuations in non-recurring items or operational adjustments. The marked increase in reported net profit margin in the latest year contrasts with the more moderate rise in adjusted margins, suggesting a possible influence of exceptional items or accounting adjustments significantly enhancing reported profitability.

Analysis of the financial data over the examined periods reveals several key trends and insights regarding profitability and equity performance.

Net Income Attributed to Synopsys

The net income shows a consistent upward trajectory from 2019 through 2024, with values increasing from approximately $532 million in 2019 to over $2.26 billion in 2024. This reflects strong growth in earnings, particularly notable is the significant jump between 2023 and 2024, where net income nearly doubles.

Total Synopsys Stockholders’ Equity

Stockholders’ equity has steadily increased over the same period, rising from about $4.08 billion in 2019 to nearly $9 billion in 2024. This continuous growth indicates an accumulation of wealth and retained earnings within the company. The increase appears somewhat more moderate in earlier years and accelerates in the latest period.

Reported Return on Equity (ROE)

The reported ROE shows a positive trend, climbing from 13.04% in 2019 to 25.17% in 2024. The increase is relatively steady year-over-year, with particularly strong improvements observed from 2021 onwards. This suggests enhanced efficiency in generating profits from shareholders' equity and improved overall profitability.

Adjusted Net Income

Adjusted net income exhibits more volatility compared to reported net income. It peaks in 2020 at around $800 million, dips slightly in 2021 and 2023, reaching a low of approximately $944 million in 2023, before increasing again in 2024 to about $1.09 billion. This pattern may reflect adjustments for certain accounting items or one-time events impacting reported figures, indicating fluctuations in core earnings performance.

Adjusted Total Stockholders’ Equity

Adjusted equity follows a steady upward path, growing from roughly $5 billion in 2019 to nearly $9.6 billion in 2024. This consistent increase aligns with long-term value creation, albeit differences from total equity suggest the impact of adjustments on reported figures over time.

Adjusted Return on Equity (ROE)

Adjusted ROE demonstrates a less consistent progression, rising from 10.11% in 2019 to a high of 16.68% in 2022, followed by a decline to 11.35% in 2024. This variation contrasts with the reported ROE trend and implies that, when considering adjustments, the company’s efficiency at generating returns from equity has faced challenges in recent years, potentially due to changes in profitability or equity adjustments.

In summary, the company shows strong growth in net income and stockholders’ equity, reflecting robust financial health and expanding shareholder value. The reported ROE indicates improving profitability efficiency, while adjusted figures reveal greater fluctuations, suggesting that certain accounting adjustments and non-recurring factors affect the interpretation of the underlying financial performance.

The financial data exhibits notable growth and variability across multiple key metrics over the analyzed periods. Net income attributed to the company increased consistently from 2019 through 2024, showing a significant acceleration in the last recorded year, rising from approximately $1.23 billion in 2023 to over $2.26 billion in 2024. This suggests strong profitability improvement toward the end of the period.

Total assets also demonstrated a steady upward trend, growing from about $6.40 billion in 2019 to $13.07 billion in 2024. This increase in asset base indicates expansion and possibly ongoing investment in resources or acquisitions to support business growth.

The reported return on assets (ROA) indicates a positive trend as well, moving from just above 8% in 2019 to over 17% in 2024. This doubling of ROA reflects enhanced efficiency in utilizing assets to generate net income, particularly evident in the latest year where the jump is substantial.

In contrast, adjusted net income follows a less linear path. It surged notably between 2019 and 2020, peaking near $1.17 billion in 2022, but then declined and showed moderate recovery by 2024, ending lower than the peak years but higher than the starting point. This fluctuation may suggest impacts from one-time items or operational factors adjusted out from the reported net income.

Adjusted total assets remained relatively stable compared to the reported total assets, expanding from around $6.65 billion in 2019 to nearly $11.88 billion in 2024. While growth is apparent, the pace is somewhat slower than for reported total assets, which may imply different valuation or recognition criteria applied in the adjusted figures.

The adjusted ROA displays variability, rising sharply from about 7.62% in 2019 to a peak of 13.3% in 2022, before declining back toward 9% by 2024. This pattern suggests fluctuating efficiency or profitability on an adjusted basis, contrasting with the consistently increasing reported ROA.

Overall, the data shows strong asset growth and improved overall profitability and asset utilization efficiency when measured on a reported basis. However, the adjusted figures reveal some volatility in underlying earnings and returns, indicating that certain adjustments have a pronounced impact on performance trends.

Net Income

Consistent growth with a sharp increase in the most recent year.

Total Assets

Steady increase indicating asset base expansion.

Reported ROA

Improved efficiency, doubling over the period.

Adjusted Net Income

Peaked during 2021-2022 period, with subsequent decline and moderate recovery.

Adjusted Total Assets

Growing but at a slower rate than reported total assets.

Adjusted ROA

Variable, with peak in 2022 and decline thereafter.