Texas Instruments Inc. (NASDAQ:TXN)

Asset Turnover

The reported and adjusted total asset turnover ratios demonstrate a consistent decline over the five-year period. The ratios decreased from approximately 0.75 in 2020 and 2021 to 0.44 and 0.45 respectively by the end of 2024, indicating a reduced efficiency in utilizing assets to generate revenue.

Current Ratio

The current ratios, both reported and adjusted, peaked in 2021 at 5.33, before gradually declining each year thereafter and reaching around 4.12 to 4.13 in 2024. Despite the downward trend, the current ratios remain relatively high, suggesting continued strong short-term liquidity.

Debt to Equity

The debt to equity ratio shows an upward trajectory, rising from around 0.58-0.62 in 2021 to 0.8-0.9 in 2024. This indicates an increasing reliance on debt financing relative to shareholders' equity, which could imply higher financial risk.

Debt to Capital

The debt to capital ratios increased steadily from the range of approximately 0.37-0.38 in 2021 to 0.45-0.47 in 2024. This pattern aligns with the rising debt to equity ratios, further confirming a growing proportion of debt in the company’s capital structure.

Financial Leverage

Financial leverage ratios remained relatively stable between 1.85 and 2.16 over the timeframe, with a slight dip around 2021 and a rebound by 2024. This suggests the company maintained a consistent level of asset financing through debt over the years, with a slight increase in leverage towards the end of the period.

Net Profit Margin

There is a notable decline in both reported and adjusted net profit margins from highs above 42% in 2021 and 2022 to approximately 30% in 2024. This reduction indicates decreasing profitability on sales, potentially signaling increased costs or pricing pressures impacting margins.

Return on Equity (ROE)

ROE exhibited a peak in earlier years, around 60%, followed by a sharp decline to below 30% by 2024. This significant decrease reflects diminished overall profitability relative to shareholders' equity, which may result from lower net income margins or other operational challenges.

Return on Assets (ROA)

Return on Assets also declined markedly over the period. From about 28-32% in the initial years, the ratio dropped to roughly 13.5% in 2024. This trend, in conjunction with falling asset turnover and profitability margins, suggests reduced efficiency in asset utilization to generate earnings.

The financial data demonstrates a number of notable trends over the five-year period analyzed. Revenue initially increased steadily from 14,461 million US dollars in 2020 to a peak of 20,028 million US dollars in 2022. Following this peak, revenue declined over the next two years, falling to 17,519 million in 2023 and further decreasing to 15,641 million in 2024. This pattern indicates a period of growth followed by a contraction in sales.

Total assets showed consistent growth throughout the entire period. Starting at 19,351 million US dollars in 2020, total assets increased each year, reaching 35,509 million by 2024. This steady expansion of the asset base suggests ongoing investment and accumulation of resources.

Regarding efficiency, reported total asset turnover exhibited a downward trend. This ratio remained fairly stable at approximately 0.74–0.75 between 2020 and 2022, but then declined significantly to 0.54 in 2023 and further to 0.44 in 2024. The adjusted total asset turnover mirrored this behavior, decreasing from a stable level around 0.75 in the early years to 0.55 and then 0.45 in the last two periods. The decrease in asset turnover ratios indicates a reduction in the ability to generate revenue from each unit of asset, suggesting a decline in operational efficiency or changes in asset utilization.

Adjusted total assets closely followed the trend of total assets, rising steadily from 19,019 million US dollars in 2020 to 34,594 million in 2024. The parallel movement of adjusted assets and corresponding turnover ratios reinforces the observation of a growing asset base coupled with diminishing efficiency in asset use.

Overall, the data reflects a scenario where the company experienced growth in revenue and assets initially, followed by a downturn in revenue and a notable decrease in asset turnover ratios despite continued asset growth. This suggests potential challenges in maintaining revenue generation relative to the scale of asset expansion during the latter part of the period.

The analysis of the annual financial data reveals several observable trends in liquidity measures over the reported periods.

Current Assets

Current assets demonstrated a general upward trend from US$10,239 million in 2020 to a peak of US$15,122 million in 2023, reflecting growth in liquidity resources. However, there was a slight decline in 2024, with current assets decreasing marginally to US$15,026 million.

Current Liabilities

Current liabilities consistently increased each year, rising from US$2,390 million in 2020 to US$3,643 million in 2024. This indicates a growing short-term obligation over the period, which warrants consideration of its impact on liquidity.

Reported Current Ratio

The reported current ratio experienced an initial increase from 4.28 in 2020 to 5.33 in 2021, signifying enhanced short-term financial strength. Subsequently, the ratio displayed a declining trend, falling to 4.7 in 2022, then 4.55 in 2023, and further down to 4.12 in 2024. Despite this decline, the ratio remained well above the benchmark value of 1, indicating an adequate ability to cover current liabilities.

Adjusted Current Assets and Adjusted Current Ratio

Adjusted current assets closely paralleled the reported current assets, with values slightly higher but following the same trend: growth through 2023 and a minor decrease in 2024. Accordingly, the adjusted current ratio mirrored the pattern of the reported current ratio, starting at 4.29 in 2020, peaking at 5.33 in 2021, and then gradually tapering off to 4.13 in 2024.

Overall, the data points to a strengthening of liquidity from 2020 through 2021, followed by a gradual decline in subsequent years, mainly driven by an increase in current liabilities outpacing growth in current assets. The current ratio levels, both reported and adjusted, while decreasing, remain indicative of a strong short-term financial position through 2024.

The financial data reveals a consistent increase in both total debt and stockholders' equity over the five-year period from 2020 to 2024. Total debt rose from $6,798 million in 2020 to $13,596 million in 2024, indicating a nearly doubling of debt levels. Similarly, stockholders' equity increased from $9,187 million to $16,903 million, reflecting steady growth in the company's equity base.

Despite the growth in equity, the reported debt to equity ratio exhibited a fluctuating but overall upward trend. Beginning at 0.74 in 2020, it decreased to a low of 0.58 in 2021, suggesting a relative strengthening of equity compared to debt. However, from 2021 onwards, the ratio rose steadily to reach 0.80 in 2024, signaling an increasing reliance on debt financing relative to equity.

When considering the adjusted figures, a similar pattern emerges. Adjusted total debt increased from $7,119 million to $14,377 million over the same period, while adjusted stockholders’ equity grew from $8,963 million to $16,041 million. Correspondingly, the adjusted debt to equity ratio declined from 0.79 in 2020 to 0.62 in 2021, yet then gradually climbed to 0.90 by 2024. This indicates that, after adjustments, the leverage ratio is higher than the reported measure, particularly notable in the final year.

Overall, the data reflects a strategy that involves increasing leverage alongside growth in equity. The upward movement in both reported and adjusted debt to equity ratios towards 2024 suggests an increased proportion of debt financing, which may imply greater financial risk. However, the steady equity growth provides a counterbalance, supporting the company’s capacity to manage higher debt levels.

The financial data reveals a general upward trend in the company's total debt from 2020 through 2024, with the amount increasing from US$ 6,798 million to US$ 13,596 million. This represents a near doubling of total debt over the five-year period, indicating a significant increase in the company's leverage.

Total capital also showed consistent growth during the same timeframe, rising from US$ 15,985 million in 2020 to US$ 30,499 million in 2024. This indicates expansion in the company's capital base, albeit at a pace slightly slower than the growth in total debt.

The reported debt to capital ratio started at 0.43 in 2020, decreased to 0.37 in 2021 and 2022, then rose again to 0.40 in 2023 and further to 0.45 in 2024. This pattern suggests the company initially reduced its relative leverage, but the trend reversed in later years, resulting in increased leverage by the end of the observed period.

When considering the adjusted total debt figures, the pattern mirrors the reported debt, rising from US$ 7,119 million in 2020 to US$ 14,377 million in 2024. The adjusted total capital also increased from US$ 16,082 million to US$ 30,418 million in the same period, closely matching the trend of reported total capital.

The adjusted debt to capital ratio presents a similar trajectory to the reported ratio, beginning at 0.44 in 2020, dropping to a low of 0.38 in 2021, then gradually increasing to 0.47 by 2024. This suggests the adjusted figures reinforce the observation that after an initial decline, the company's leverage has been rising in recent years.

Overall, the data indicates a strategic increase in capital employed alongside a growing reliance on debt financing. Although the company reduced its debt to capital ratio in the early years, this ratio has increased in the most recent years analyzed, potentially signaling a shift towards higher financial risk or an increased utilization of debt for funding purposes.

The financial data indicate consistent growth in total assets over the five-year period, rising from $19,351 million in 2020 to $35,509 million in 2024. This upward trend suggests expansion in the company's asset base, reflecting either acquisitions, investments, or organic growth in asset holdings.

Stockholders’ equity also shows a steady increase from $9,187 million in 2020 to $16,903 million in 2024. The growth in equity indicates enhanced net worth and possibly retained earnings accumulation or new equity injections, supporting a stronger capital foundation over time.

Examining reported financial leverage reveals a decrease from 2.11 in 2020 to 1.85 in 2021, followed by a comparatively stable range around 1.87 to 1.91 through 2022 to 2023. A slight rise to 2.10 in 2024 suggests an increase in the ratio of total assets to equity, indicating a marginal increase in leverage or reliance on debt financing in the most recent year.

Adjusted totals, which presumably account for certain reclassifications or eliminations, follow a similar upward trajectory. Adjusted total assets increase from $19,019 million in 2020 to $34,594 million in 2024, mirroring the trend observed in reported total assets but consistently slightly lower, reflecting the adjustments made.

Adjusted stockholders’ equity grows from $8,963 million in 2020 to $16,041 million in 2024, maintaining a similar pattern to the reported equity but at slightly reduced levels after adjustments.

Adjusted financial leverage shows a decline from 2.12 in 2020 to 1.85 in 2021, followed by a gradual increase to 2.16 in 2024. This pattern aligns closely with the reported leverage trend but indicates a slightly higher leverage level by 2024, suggesting adjusted calculations may capture additional financial obligations or different balance sheet treatments.

Key observations:

Both total assets and stockholders’ equity have consistently increased, supporting a narrative of growth and capitalization improvement.

Financial leverage ratios initially declined but remained relatively stable before trending upward again in the most recent year, pointing to a cautious increase in debt or other liabilities in relation to equity.

The adjusted figures parallel reported values with minor differences, highlighting the impact of adjustments on financial statement analysis and suggesting the importance of considering both reported and adjusted metrics for a comprehensive assessment.

The financial data indicates a series of fluctuations in key performance metrics over the five-year period. Initially, there is a consistent growth trend in both net income and revenue from 2020 to 2022. Net income increased from 5595 million US dollars in 2020 to a peak of 8749 million in 2022, while revenue grew from 14461 million US dollars to 20028 million during the same period. This reflects a phase of strong operational and financial performance.

Following 2022, there is a noticeable decline in net income, dropping to 6510 million US dollars in 2023 and further to 4799 million in 2024. Revenue exhibits a similar downward trend, contracting to 17519 million in 2023 and 15641 million in 2024. This contraction in both revenue and net income suggests challenges affecting profitability and sales volumes in the later years.

Examining profit margins, the reported net profit margin rose from 38.69% in 2020 to its highest level at 43.68% in 2022. However, this margin decreased significantly afterward, falling to 37.16% in 2023 and 30.68% in 2024. The adjusted net profit margin follows a similar pattern, peaking at 43.45% in 2021, slightly declining to 42.25% in 2022, and then more steeply dropping to 35.75% in 2023 and 29.79% in 2024. These shifts indicate reduced profitability relative to revenue over the later years, including after adjustments.

The parallel movements in net income, revenue, and profit margins highlight a period of robust financial performance followed by a downturn over the final two years. The decreasing margins alongside falling revenues suggest that the company may be encountering increased costs, pricing pressures, or other economic factors impacting overall profitability.

Net Income Trends

Steady increase from 2020 to 2022, followed by a marked decline through 2024.

Revenue Trends

Growth from 2020 reaching a high in 2022, then a contraction in 2023 and 2024.

Profit Margins

Both reported and adjusted margins peaked around 2021-2022 and subsequently fell, indicating decreased operational efficiency or increased expenses relative to income.

Overall Interpretation

The data reflects an initial phase of growth and strong profitability, succeeded by a period of reduced revenue and profitability, likely signaling emerging challenges or shifts in market conditions during 2023 and 2024.

The financial data reveals a dynamic pattern in profitability and capital structure over the five-year period.

Net Income and Adjusted Net Income

The net income exhibited a general upward trend from 2020 to 2022, increasing from 5,595 million to 8,749 million US dollars, followed by a notable decline in 2023 and 2024, reaching 4,799 million US dollars. The adjusted net income mirrored this trajectory, with initial growth until 2022 and subsequent decreases over the last two years. This indicates a peak in profitability around 2022, followed by a downturn through 2023 and 2024.

Stockholders’ Equity and Adjusted Stockholders’ Equity

Stockholders’ equity steadily rose each year from 9,187 million US dollars in 2020 to a plateau around 16,900 million US dollars by 2023 and 2024. Adjusted stockholders’ equity followed a similar pattern, increasing consistently before stabilizing in the final years. This suggests the company has been increasing its equity base over time, with growth moderating recently.

Return on Equity (ROE) and Adjusted ROE

Reported ROE was exceptionally high in 2020 through 2022, maintaining levels around 60%, before sharply falling to 38.53% in 2023 and further to 28.39% in 2024. Adjusted ROE showed a comparable trend, indicating that the decline in profitability relative to equity is not solely attributed to accounting adjustments. The reduction in ROE aligns with the deterioration of net income in the later years despite equity growth.

Overall, the data illustrates a phase of strong profitability and efficiency in equity utilization up to 2022, followed by a significant decline in earnings generation capacity from 2023 onwards. The equity growth has continued but at a slowing rate, which, combined with shrinking net income, explains the diminishing returns on investment for shareholders.

Net Income Trend

Net income showed a significant increase from 5595 million USD in 2020 to a peak of 8749 million USD in 2022. However, it declined notably in the subsequent years, falling to 6510 million USD in 2023 and further to 4799 million USD in 2024. This represents a substantial decrease after the 2022 high.

Total Assets Movement

Total assets consistently grew over the five-year period. They increased from 19351 million USD in 2020 to 35509 million USD by 2024. The growth was steady with no periods of decline, indicating ongoing investment or asset accumulation.

Reported Return on Assets (ROA)

The reported ROA experienced an overall declining trend after 2022. It rose from 28.91% in 2020 to a maximum of 32.16% in 2022, then decreased sharply to 20.12% in 2023 and 13.51% in 2024. This reflects diminished efficiency in generating net income from total assets despite asset growth.

Adjusted Net Income Dynamics

Adjusted net income followed a similar pattern to net income. It increased from 5466 million USD in 2020 to 8461 million USD in 2022, followed by a decrease to 6263 million USD in 2023 and 4659 million USD in 2024. The adjustment had a moderate impact but did not change the overall trend.

Adjusted Total Assets Growth

Adjusted total assets also showed continuous growth from 19019 million USD in 2020 to 34594 million USD in 2024, mirroring the trend observed in total assets. The rise suggests expanding asset base under adjusted measurements as well.

Adjusted ROA Pattern

Adjusted ROA peaked at 32.64% in 2021, slightly above the reported ROA peak year of 2022, and then declined to 19.82% in 2023 and 13.47% in 2024. This decline highlights a consistent drop in asset profitability when using adjusted figures, confirming the decreasing return effectiveness of the asset base over recent years.

Overall Analysis

There is an observable trend of rising asset base accompanied by improving profitability metrics through 2021-2022, followed by a marked reduction in profitability in 2023 and 2024. The decline in ROA metrics, despite asset growth, points toward challenges in maintaining income generation efficiency from the increasing asset volume. Both reported and adjusted figures convey similar patterns, lending reliability to the observed trends.