Take-Two Interactive Software Inc. (NASDAQ:TTWO)

The analysis of the financial ratios over the examined periods reveals significant fluctuations and deteriorations in the profitability and leverage metrics.

Return on Assets (ROA)

The ROA exhibited an initial positive trend, increasing from 8.17% in 2020 to a peak of 9.77% in 2021. However, after this peak, it declined sharply to 6.39% in 2022, and then transitioned into negative territory. The negative trend intensified substantially, reaching -7.09% in 2023 and further deteriorating to -30.65% in 2024 and -48.79% in 2025. This pattern indicates a consistent decline in the company's efficiency in utilizing its assets to generate profit over the latter years.

Financial Leverage

Financial leverage showed a decreasing trend from 1.95 in 2020 to 1.72 in 2022, suggesting a reduction in the use of debt relative to equity during these years. However, leverage began to increase from 2023 onward, rising from 1.75 to 2.16 in 2024, and then experiencing a significant jump to 4.29 in 2025. This upward trend in leverage signals a notable increase in financial risk and dependency on debt financing over the recent periods.

Return on Equity (ROE)

ROE followed a trajectory similar to ROA but with more pronounced volatility. It started at a solid 15.93% in 2020, improved to 17.67% in 2021, and then declined sharply to 10.97% in 2022. The ratio then shifted to negative values starting in 2023 at -12.44%, worsened significantly to -66.06% in 2024, and dramatically dropped to -209.52% in 2025. This steep decline in ROE reflects both operational losses and increased financial leverage, severely impacting shareholder returns.

Overall, the data depicts a concerning downturn in profitability, with both ROA and ROE deteriorating substantially after 2021. Concurrently, the increase in financial leverage in the later years indicates a growing financial risk profile. The combination of declining returns and escalating leverage suggests challenges in operational performance and potential difficulties in managing debt levels effectively.

Net Profit Margin

The net profit margin showed an initial increase from 13.09% in 2020 to a peak of 17.46% in 2021. After this peak, there was a significant decline, with the margin turning negative in 2023 at -21.02%, further deteriorating to -69.99% in 2024 and reaching -79.5% in 2025. This sharp reversal indicates escalating profitability challenges over the latter periods.

Asset Turnover

The asset turnover ratio displayed a gradual downward trend from 0.62 in 2020 to 0.54 in 2022, followed by a more pronounced decrease to 0.34 in 2023. Subsequently, the ratio improved somewhat, rising to 0.44 in 2024 and 0.61 in 2025, approaching the initial levels seen in 2020. This fluctuation suggests varying efficiency in asset utilization, with a temporary decline followed by partial recovery.

Financial Leverage

Financial leverage consistently decreased from 1.95 in 2020 to 1.72 in 2022. However, it stabilized slightly at 1.75 in 2023 before increasing substantially to 2.16 in 2024 and markedly to 4.29 in 2025. This sharp increase in leverage indicates growing reliance on debt financing or other liabilities in recent years, potentially increasing financial risk.

Return on Equity (ROE)

ROE followed a similar pattern to net profit margin, initially rising from 15.93% in 2020 to 17.67% in 2021, then declining to 10.97% in 2022. From 2023 onward, ROE turned negative, registering -12.44%, declining further to -66.06% and plummeting to -209.52% in 2025. This dramatic drop signals severe challenges in generating shareholder returns in recent years.

Tax Burden

The tax burden ratio remained relatively stable around 0.87 to 0.9 between 2020 and 2022, indicating consistent tax impact on earnings. Data beyond 2022 is not available.

Interest Burden

The interest burden ratio was steady at 0.99 in 2020 and 2021 but decreased slightly to 0.96 in 2022, suggesting a minor increase in interest expenses relative to operating income during that period. No data is provided for later years.

EBIT Margin

The EBIT margin showed a notable decline from a positive 14.93% in 2020 and a peak of 20.28% in 2021, dropping sharply to 13.81% in 2022. From 2023 onwards, the margin turned negative, worsening significantly to -22.59% in 2023, and further declining to -66.59% and -76.75% in 2024 and 2025 respectively. This trend points to deteriorating operating profitability over time.

Asset Turnover

Asset turnover exhibited a gradual decline from 0.62 in 2020 to 0.54 in 2022, indicating reduced efficiency in generating sales from assets initially. However, the ratio decreased more sharply to 0.34 in 2023 before recovering to 0.44 in 2024 and 0.61 in 2025, suggesting a possible improvement in asset utilization in the later years.

Financial Leverage

Financial leverage steadily decreased from 1.95 in 2020 to 1.72 in 2022 but increased again to 1.75 in 2023. A noticeable rise occurred thereafter, with the ratio climbing to 2.16 in 2024 and sharply escalating to 4.29 in 2025. This rising leverage indicates increased reliance on debt financing, particularly in the most recent years.

Return on Equity (ROE)

ROE followed a declining trajectory beginning with a solid positive return of 15.93% in 2020, peaking at 17.67% in 2021, before falling to 10.97% in 2022. From 2023, ROE turned negative, reaching -12.44%, and further worsening drastically to -66.06% in 2024 and -209.52% in 2025. This pattern reflects deteriorating profitability for shareholders and substantial equity value erosion in recent years.

Net Profit Margin

The net profit margin demonstrates a declining trend over the observed periods. Initially, the margin increased from 13.09% in 2020 to a peak of 17.46% in 2021, indicating improved profitability. However, from 2022 onward, the margin sharply decreased, turning negative in 2023 at -21.02%, and further deteriorating significantly to -69.99% in 2024 and -79.5% in 2025. This pattern suggests a substantial reduction in profitability culminating in sustained losses in the recent years.

Asset Turnover

The asset turnover ratio exhibits variability with an overall reducing trend until 2023, followed by recovery in later years. It decreased from 0.62 in 2020 to 0.54 in 2022, reflecting less efficient utilization of assets to generate revenue. The ratio further declined to a low of 0.34 in 2023 but rebounded to 0.44 in 2024 and 0.61 in 2025, approaching the earlier levels. This suggests fluctuating operational efficiency, with a notable improvement in the last two years observed.

Return on Assets (ROA)

Return on assets followed a pattern similar to net profit margin, with initial positive performance followed by a significant downturn. ROA increased from 8.17% in 2020 to 9.77% in 2021, then dropped to 6.39% in 2022. Subsequently, the ratio turned negative, registering -7.09% in 2023 and declining steeply to -30.65% in 2024 and -48.79% in 2025. This negative trajectory reflects deteriorating asset profitability and challenges in generating returns from assets during recent years.

The financial data reveals distinct trends across several key performance metrics over the examined periods. An analysis of profitability, efficiency, and burden ratios provides insight into the company's operational and financial health.

Tax Burden

The tax burden ratio remained relatively stable between March 2020 and March 2022, fluctuating slightly between 0.87 and 0.90. Data beyond March 2022 is unavailable, preventing a current assessment of this metric. The stability up to 2022 indicates consistent effective tax rates during this period.

Interest Burden

The interest burden ratio was very high, around 0.96 to 0.99, from 2020 through 2022. This suggests that interest expenses were minimal relative to operating income, implying limited impact of interest costs on earnings before taxes during these years. No data for subsequent years limits further evaluation.

EBIT Margin

The earnings before interest and tax (EBIT) margin exhibited a declining trajectory after March 2021. Starting at 20.28% in 2021, it dropped notably to 13.81% in 2022. From 2023 onwards, EBIT margin turned negative, with significant deterioration reaching -22.59% in 2023, worsening further to -66.59% in 2024 and -76.75% in 2025. This trend indicates a severe decline in operating profitability on a year-over-year basis, culminating in substantial operating losses in the latest periods.

Asset Turnover

Asset turnover ratio decreased from 0.62 in 2020 to 0.54 by 2022, indicating a decline in asset utilization efficiency. The ratio dipped further to 0.34 in 2023, reflecting reduced revenue generation from asset bases. However, from 2024 onward, the ratio improved to 0.44 and then to 0.61 in 2025, suggesting a recovery in operational efficiency despite profitability challenges.

Return on Assets (ROA)

ROA followed a downward trend overall. It rose from 8.17% in 2020 to 9.77% in 2021 but declined to 6.39% by 2022. Starting in 2023, ROA turned negative, reaching -7.09%, and deteriorated further to -30.65% in 2024 and -48.79% in 2025. This negative trajectory reflects the combined impact of falling profitability and fluctuating asset utilization, resulting in worsening returns on the company's asset base.

In summary, while interest and tax burdens remained relatively stable up to 2022, the company experienced marked declines in operating profitability and returns on assets beginning in 2023. Despite some recovery in asset turnover after 2023, this was insufficient to offset the significant negative EBIT margins and ROA figures. These trends suggest increasing challenges in maintaining profitability and efficient asset use in recent periods.

Tax Burden

The tax burden ratio remained relatively stable from 2020 to 2022, fluctuating slightly between 0.87 and 0.90. Data after 2022 is unavailable, preventing further analysis of recent trends in this metric.

Interest Burden

The interest burden ratio showed minimal variation between 2020 and 2022, maintaining values close to 0.99 before a slight decrease to 0.96 in 2022. No data is available beyond this point.

EBIT Margin

The EBIT margin experienced an increase from 14.93% in 2020 to a peak of 20.28% in 2021. However, a sharp decline followed, dropping to 13.81% in 2022, and then turning negative in 2023 with -22.59%. The downward trend intensified in the subsequent years, with margins reaching -66.59% in 2024 and further decreasing to -76.75% in 2025. This pattern indicates a significant deterioration in operating profitability over the latter periods.

Net Profit Margin

Net profit margin mirrored the EBIT margin trend, initially rising from 13.09% in 2020 to 17.46% in 2021 before declining to 11.93% in 2022. Subsequently, it became negative in 2023 at -21.02%, followed by a steep decline to -69.99% in 2024, and further worsening to -79.5% in 2025. This suggests a persistent decline in overall profitability, culminating in substantial losses in recent years.