Synopsys Inc. (NASDAQ:SNPS)

The financial ratios presented demonstrate varied trends over the six-year period. Generally, reported ratios exhibit more volatility than their adjusted counterparts, suggesting the adjustments aim to provide a more stable view of underlying performance. Several key areas show notable shifts, particularly in profitability and leverage metrics.

Asset Turnover

Both the reported and adjusted total asset turnover ratios increased from 2020 to 2023, peaking in 2023 at 0.57 and 0.60 respectively. However, a significant decline is observed in 2025, with the reported ratio falling to 0.15 and the adjusted ratio to 0.16. This suggests a substantial decrease in the efficiency with which assets are being used to generate revenue in the later years.

Liquidity

The reported current ratio shows moderate fluctuations, increasing significantly in 2024 to 2.44 before decreasing to 1.62 in 2025. The adjusted current ratio, however, remains consistently higher, starting at 3.43 in 2020 and decreasing to 4.13 in 2025. This indicates a strong liquidity position when considering the adjustments made, potentially reflecting a more comprehensive view of liquid assets.

Leverage

Reported debt to equity and debt to capital ratios are minimal through 2023, reaching zero in 2022 and 2023. A substantial increase is then observed in 2025, to 0.48 and 0.32 respectively. The adjusted ratios show a similar pattern, though at lower magnitudes, remaining below 0.10 until 2025, when they rise to 0.45 and 0.31. This suggests a significant increase in debt financing in the later period. Reported financial leverage remains relatively stable between 1.64 and 1.71 from 2020 to 2023, then decreases to 1.45 in 2024 before rising again to 1.70 in 2025. The adjusted financial leverage shows a similar trend, but with less fluctuation.

Profitability

Reported net profit margin increased steadily from 2020 to 2023, peaking at 21.05% in 2023, before declining to 18.89% in 2025. The adjusted net profit margin shows a different pattern, with a decrease from 2020 to 2021, followed by an increase to 21.25% in 2022, then a decline to 17.71% in 2024 and a recovery to 22.08% in 2025. The reported return on equity (ROE) follows a similar trend to the net profit margin, peaking in 2023 at 20.01% and falling to 4.70% in 2025. The adjusted ROE shows less volatility, but also declines significantly in the later years. Reported return on assets (ROA) also peaks in 2023 at 11.90% and declines to 2.76% in 2025, while the adjusted ROA shows a similar pattern, though with less dramatic fluctuations.

In summary, the period demonstrates a generally positive trend in profitability and asset utilization through 2023, followed by a marked decline in asset turnover and profitability in 2025, coupled with a substantial increase in leverage. The adjusted ratios provide a more consistent view, but confirm the overall trend of deteriorating performance in the final two years of the observed period.

The adjusted total asset turnover ratio exhibited an increasing trend from 2020 to 2022, followed by fluctuations in subsequent years. Revenue consistently increased throughout the observed period, while total assets experienced a significant jump in 2024 and a substantial increase in 2025. These asset changes heavily influenced the turnover ratio.

Adjusted Total Asset Turnover Trend (2020-2025)

The adjusted total asset turnover ratio increased from 0.51 in 2020 to 0.63 in 2022, indicating improving efficiency in asset utilization. A decrease to 0.60 was observed in 2023. The ratio then declined to 0.52 in 2024. A substantial decrease to 0.16 occurred in 2025.

Revenue Growth

Revenue demonstrated consistent growth throughout the period, increasing from US$3,875,816 thousand in 2020 to US$7,950,128 thousand in 2025. This positive trend suggests increasing sales or pricing power.

Asset Changes and Impact on Turnover

Adjusted total assets increased steadily from US$7,561,080 thousand in 2020 to US$11,877,311 thousand in 2024. However, a dramatic increase to US$48,201,261 thousand occurred in 2025. This large asset increase, without a proportional revenue increase, resulted in the significant decline in the adjusted total asset turnover ratio in 2025. The substantial asset growth in the final year appears to be the primary driver of the turnover ratio’s decline.

The period between 2020 and 2022 shows a positive correlation between revenue growth and asset turnover, suggesting effective asset management. However, the significant asset expansion in 2025 warrants further investigation to determine the nature of these assets and their potential to generate future revenue.

The adjusted current ratio exhibits considerable fluctuation over the observed period. Initially strong, the ratio experiences a decline before rebounding to significantly higher levels, followed by a moderate decrease. A detailed examination of the trends reveals key insights into the company’s short-term liquidity position as reflected by these adjusted figures.

Overall Trend

The adjusted current ratio begins at a high of 3.43 in 2020, decreases to 3.17 in 2021, then increases to 3.52 in 2022. A subsequent decline to 2.87 is observed in 2023, followed by a substantial increase to 5.18 in 2024, and a final decrease to 4.13 in 2025. This pattern suggests volatility in the relationship between adjusted current assets and adjusted current liabilities.

Adjusted Current Ratio – 2020-2022

From 2020 to 2022, the adjusted current ratio remains consistently above 3.00, indicating a strong ability to cover short-term obligations with adjusted current assets. The slight decrease from 3.43 to 3.17 in 2021 is followed by a recovery to 3.52 in 2022, suggesting a stabilization of the short-term liquidity position.

Adjusted Current Ratio – 2023-2025

The ratio declines to 2.87 in 2023, representing the lowest value in the observed period. However, a dramatic increase to 5.18 occurs in 2024, indicating a significant improvement in short-term liquidity. The ratio then moderates to 4.13 in 2025, still representing a robust liquidity position but a decrease from the prior year’s peak.

Underlying Components

The substantial changes in the adjusted current ratio are driven by movements in both adjusted current assets and adjusted current liabilities. While adjusted current assets generally increased over the period, the adjusted current liabilities also experienced significant fluctuations, particularly the increase from 1,209,451 in 2023 to 1,476,533 in 2025. The largest increase in the ratio in 2024 is attributable to a larger increase in adjusted current assets compared to adjusted current liabilities.

In conclusion, the adjusted current ratio demonstrates a dynamic pattern over the six-year period. While generally indicating a healthy short-term liquidity position, the observed fluctuations warrant further investigation into the specific factors driving the changes in both adjusted current assets and adjusted current liabilities.

The adjusted debt to equity ratio demonstrates a fluctuating pattern over the observed period. Initially, the ratio exhibits a gradual decline before a significant increase in the later years. Total debt, as reported, decreased substantially from 2020 to 2022, then stabilized before experiencing a dramatic rise in 2025. Simultaneously, total stockholders’ equity consistently increased from 2020 to 2025, though the rate of increase accelerated in the final two years.

Adjusted Debt to Equity Ratio - Trend Analysis

From 2020 to 2023, the adjusted debt to equity ratio remained relatively stable, ranging between 0.09 and 0.11. This indicates a consistent capital structure with a moderate level of debt relative to equity. However, a substantial shift occurs in 2024 and 2025. The ratio decreases to 0.07 in 2024, before increasing significantly to 0.45 in 2025. This suggests a considerable increase in debt relative to equity during these periods.

Total Debt - Trend Analysis

Reported total debt decreased significantly from US$127,907 thousand in 2020 to US$20,824 thousand in 2022, indicating a substantial reduction in borrowing. This trend plateaus between 2022 and 2024, with only minor fluctuations. However, a dramatic increase is observed in 2025, reaching US$13,484,515 thousand. This represents a substantial change in the company’s debt profile.

Total Stockholders’ Equity - Trend Analysis

Total stockholders’ equity consistently increased throughout the period, from US$4,907,404 thousand in 2020 to US$28,327,602 thousand in 2025. The rate of growth appears to accelerate in the later years, particularly between 2023 and 2025, suggesting increased retained earnings or capital contributions.

Adjusted vs. Reported Debt to Equity

The reported debt to equity ratio remains at 0.00 for 2022, 2023 and 2024, and then jumps to 0.48 in 2025. This is in contrast to the adjusted debt to equity ratio, which shows a more consistent trend. The significant difference in 2025 suggests that the adjustments made to total debt and equity have a substantial impact on the calculated ratio, indicating the importance of considering these adjustments when assessing the company’s financial leverage.

The substantial increase in both adjusted total debt and adjusted total stockholders’ equity in 2025 warrants further investigation to understand the underlying drivers of these changes and their potential implications for the company’s financial risk and future performance.

The adjusted debt to capital ratio exhibits a fluctuating pattern over the observed period. Initially, the ratio remains relatively stable before experiencing a significant increase in the later years. Total debt and total capital both demonstrate an overall upward trend, though with considerable variation, particularly in the final two periods.

Adjusted Debt to Capital Ratio (2020-2025)

From October 31, 2020, to October 31, 2023, the adjusted debt to capital ratio remained consistent, hovering around 0.09 to 0.10. This indicates a stable capital structure with a moderate level of debt relative to capital. A decrease to 0.07 is observed at October 31, 2024. However, a substantial increase is then seen at October 31, 2025, reaching 0.31. This suggests a considerable shift towards increased leverage.

Total Debt Trend

Total debt decreased significantly from 2020 to 2022, falling from US$127,907 thousand to US$20,824 thousand. It remained relatively low through 2024 at US$15,601 thousand. A dramatic increase is then observed in 2025, reaching US$13,484,515 thousand. This represents a substantial change in the company’s debt profile.

Total Capital Trend

Total capital generally increased from 2020 to 2025, moving from US$5,035,311 thousand to US$41,812,117 thousand. The rate of increase accelerated in the later years, particularly between 2024 and 2025. This suggests significant growth in the company’s capital base, though the increase in debt in 2025 is proportionally larger.

The substantial increases in both adjusted total debt and adjusted total capital in the final two periods warrant further investigation. While the capital base is expanding, the increased reliance on debt, as evidenced by the rising adjusted debt to capital ratio, could potentially introduce increased financial risk.

An examination of the financial information reveals trends in adjusted financial leverage over a six-year period. Total assets and total stockholders’ equity generally increased throughout the period, with a significant jump in both metrics between 2023 and 2024, and a much larger increase between 2024 and 2025. Reported financial leverage remained relatively stable, fluctuating between 1.64 and 1.71 before decreasing to 1.45 in 2024 and then increasing again to 1.70 in 2025. The adjusted figures show a different pattern.

Adjusted Financial Leverage – Overall Trend

Adjusted financial leverage exhibited a relatively stable pattern from 2020 through 2024, ranging between 1.25 and 1.29. However, a notable increase to 1.51 is observed in 2025. This suggests a shift in the company’s capital structure or asset composition in the final year of the observed period.

Adjusted Financial Leverage – 2020-2024

From 2020 to 2024, adjusted financial leverage remained within a narrow range, initially at 1.27, increasing slightly to 1.28 in 2021, decreasing to 1.25 in 2022, increasing again to 1.29 in 2023, and then decreasing to 1.24 in 2024. This indicates a consistent, albeit modest, level of financial leverage during this timeframe.

Relationship between Adjusted and Reported Leverage

The adjusted financial leverage is consistently lower than the reported financial leverage throughout the period. This difference suggests that certain asset or equity items are being adjusted downwards in the calculation of the adjusted ratio. The magnitude of the difference appears to remain relatively consistent until 2025, where the adjusted leverage increases more substantially than the reported leverage.

Impact of 2025 Changes

The substantial increases in both adjusted total assets and adjusted total stockholders’ equity in 2025 are accompanied by a more pronounced increase in adjusted financial leverage compared to the changes observed in the reported leverage. This suggests that the adjustments made to the asset and equity figures in 2025 have a greater impact on the calculated leverage ratio than in previous years.

In summary, the adjusted financial leverage indicates a generally conservative capital structure from 2020 to 2024, with a potential shift towards increased leverage in 2025. The consistent difference between reported and adjusted leverage warrants further investigation into the nature of the adjustments being made.

The adjusted net profit margin exhibited fluctuations over the observed period. Initial values demonstrate a generally healthy profitability, followed by periods of decline and subsequent recovery. A detailed examination of the trends reveals key insights into the company’s performance.

Overall Trend

From 2020 to 2025, the adjusted net profit margin demonstrated volatility. It began at 20.65% in 2020, decreased to 18.22% in 2021, increased to 21.25% in 2022, then declined significantly to 16.48% in 2023. A recovery was observed in 2024, reaching 17.71%, followed by a substantial increase to 22.08% in 2025.

Initial Period (2020-2022)

The adjusted net profit margin started at a relatively high level in 2020. A slight decrease occurred in 2021, but the margin rebounded strongly in 2022, exceeding the 2020 level. This suggests effective cost management or pricing strategies during this period, or potentially a shift in revenue mix towards higher-margin products or services.

Mid-Period Decline (2022-2023)

A notable decline in the adjusted net profit margin was observed between 2022 and 2023. This decrease, from 21.25% to 16.48%, could be attributed to increased operating expenses, a change in the sales mix, or potentially increased competition impacting pricing power. Further investigation into the underlying cost structure and revenue composition would be necessary to pinpoint the exact causes.

Recovery and Peak (2024-2025)

The adjusted net profit margin showed signs of recovery in 2024, increasing to 17.71%. This trend continued into 2025, with a significant jump to 22.08%. This substantial improvement suggests successful implementation of cost-cutting measures, increased operational efficiency, or a favorable shift in the product/service portfolio. The 2025 value represents the highest adjusted net profit margin observed throughout the period.

Comparison to Reported Margin

The adjusted net profit margin consistently differed from the reported net profit margin. The adjustments appear to impact the margin, sometimes increasing it (as in 2020 and 2022) and sometimes decreasing it (as in 2023). This indicates the presence of non-recurring items or accounting adjustments that significantly affect the reported profitability. The nature of these adjustments warrants further scrutiny.

In conclusion, the adjusted net profit margin demonstrates a dynamic pattern over the analyzed timeframe. While initial years showed strong performance, a mid-period decline was followed by a robust recovery, culminating in a peak in 2025. The fluctuations highlight the importance of ongoing monitoring of cost structures, revenue mixes, and the impact of accounting adjustments on overall profitability.

The adjusted return on equity (ROE) exhibits fluctuating performance over the observed period. While net income and total stockholders’ equity generally increased from 2020 to 2024, the adjusted ROE demonstrates a more complex pattern. A subsequent decline in both metrics in 2025 significantly impacted the adjusted ROE.

Adjusted ROE Trend (2020-2025)

The adjusted ROE began at 13.48% in 2020 and decreased to 12.47% in 2021. It then experienced an increase, reaching 16.68% in 2022, before declining to 12.84% in 2023 and further to 11.35% in 2024. A substantial decrease occurred in 2025, with the adjusted ROE falling to 5.50%.

Relationship to Adjusted Net Income

Adjusted net income increased from US$800,347 thousand in 2020 to US$1,755,258 thousand in 2025, but not consistently. A decrease was observed between 2021 and 2022, and again between 2023 and 2024. The largest decrease in adjusted net income occurred between 2024 and 2025, coinciding with the most significant drop in adjusted ROE. This suggests a strong correlation between adjusted net income and the adjusted ROE.

Relationship to Adjusted Stockholders’ Equity

Adjusted total stockholders’ equity showed a consistent upward trend from 2020 to 2025, increasing from US$5,938,895 thousand to US$31,937,967 thousand. However, the rate of increase varied. The substantial increase in equity in 2025, coupled with the decrease in adjusted net income, contributed to the significant decline in adjusted ROE for that year. This indicates that while equity growth is positive, it does not necessarily translate to improved ROE if net income declines proportionally or more.

Comparison to Reported ROE

Reported ROE generally increased from 2020 to 2024, peaking at 25.17% in 2024, before falling dramatically to 4.70% in 2025. The adjusted ROE consistently remained lower than the reported ROE from 2020 to 2024, but the gap narrowed in 2025. The substantial declines in both reported and adjusted ROE in 2025 suggest a significant shift in profitability relative to equity.

In summary, the adjusted ROE demonstrates a volatile pattern, influenced by both adjusted net income and adjusted stockholders’ equity. The considerable decrease in adjusted ROE in 2025 warrants further investigation to understand the underlying factors contributing to the decline in profitability relative to equity.

The adjusted return on assets (ROA) exhibited fluctuating performance over the observed period. Initially, the adjusted ROA demonstrated an increase followed by a period of decline and subsequent volatility. A detailed examination of the trends is presented below.

Overall Trend

From 2020 to 2022, the adjusted ROA increased from 10.59% to 13.30%. This positive trend reversed in 2023, with a decrease to 9.92%, followed by a further decline to 9.17% in 2024. The most significant change occurred in 2025, where the adjusted ROA fell substantially to 3.64%.

Comparison to Reported ROA

The adjusted ROA consistently differed from the reported ROA across all years. The adjusted ROA was higher than the reported ROA in 2020, 2021, and 2022. However, in 2023 and 2024, the adjusted ROA was lower than the reported ROA. This difference was most pronounced in 2025, where the adjusted ROA was significantly lower than the reported ROA.

Asset and Net Income Influence

The increase in adjusted ROA from 2020 to 2022 coincided with growth in both adjusted net income and adjusted total assets. While adjusted net income continued to rise in 2023, adjusted total assets also increased, mitigating the impact on the ROA. The substantial increase in adjusted total assets in 2025, coupled with a decrease in adjusted net income, resulted in the significant decline in adjusted ROA observed in that year.

Year-over-Year Changes

The largest year-over-year increase in adjusted ROA occurred between 2021 and 2022 (a 3.57 percentage point increase). The most substantial year-over-year decrease occurred between 2024 and 2025 (a 5.50 percentage point decrease). The change between 2023 and 2024 was a decrease of 0.75 percentage points, while the change between 2020 and 2021 was a decrease of 0.86 percentage points.

In summary, the adjusted ROA experienced a period of growth followed by increasing volatility and a substantial decline in the final year of the observed period. These fluctuations appear to be strongly correlated with changes in both adjusted net income and adjusted total assets, particularly the significant asset increase in 2025.