Texas Instruments Inc. (NASDAQ:TXN)

Return on Assets (ROA)

The Return on Assets began exhibiting strong positive values from the quarter ending March 31, 2021, with a peak around late 2022, reaching approximately 34.7%. Following this peak, there is a clear downward trend through 2023 into 2024 and 2025. By the quarter ending September 30, 2025, ROA levels off around 14.4%, indicating a substantial decline in asset profitability over time despite remaining positive.

Financial Leverage

Financial leverage shows a gradual decrease from early 2020 through to mid-2022, moving from values above 2.2 down to a low near 1.75. After mid-2022, leverage begins a slight upward adjustment fluctuating between approximately 1.9 and 2.13 through 2025. This activity suggests a period of deleveraging followed by a modest re-leveraging phase, reflecting changes in the capital structure and reliance on debt financing.

Return on Equity (ROE)

ROE displays a pattern similar to ROA, with elevated values starting in early 2021 and peaking near the end of 2022 at around 61.5%. Thereafter, ROE consistently decreases, reaching lower levels near 28-30% in 2025. This decline signals weakening equity profitability over the recent periods, although the ratios remain at relatively high levels compared to typical standards.

Overall Trends and Insights

The financial metrics indicate a period of strong profitability for both assets and equity from 2021 through 2022, followed by a marked reduction in profitability in subsequent years. The decrease in ROA and ROE corresponds with a moderate increase in financial leverage starting in mid-2022, which may suggest strategic adjustments in financing amidst changing operational efficiency or market conditions. The maintained positive returns, despite the downward trends, reflect ongoing profitability, albeit at reduced margins.

The financial ratios over the analyzed periods reveal distinct trends in profitability, operational efficiency, leverage, and overall returns to equity holders.

Net Profit Margin

The net profit margin shows a general upward trend from the first available data point, rising steadily from 38.69% to a peak of 44.21% over several quarters. Following this peak, there is a consistent decline down to 29.21% by the latest period. This pattern suggests initially improving profitability efficiency which later faced gradual margin compression potentially due to increased costs or pricing pressures.

Asset Turnover

Asset turnover started at 0.75 and experienced mild fluctuations early on, reaching a peak near 0.81 before entering a prolonged downward trajectory. It declined steadily to a low of 0.44 in several subsequent quarters, slightly recovering to 0.49 by the latest quarter. This indicates a reduction in the efficiency with which the company uses its assets to generate revenue, with only minimal improvement toward the end of the period.

Financial Leverage

Financial leverage ratios oscillate moderately throughout the period, beginning at 2.23 and initially decreasing to around 1.85, indicating a reduction in the use of debt relative to equity. Later periods show a gradual increase, reaching about 2.13, reflecting a return to higher leverage. The relative stability with minor fluctuations suggests management's selective approach to debt usage for financing activities.

Return on Equity (ROE)

ROE exhibits a strong positive performance in the early periods, staying above 60% for several quarters before declining consistently to approximately 30.33% by the last available data point. The steady decrease mirrors the trends observed in net profit margin and asset turnover, highlighting diminished profitability and operational efficiency impacting returns on shareholders' equity over time.

In summary, the company experienced strong profitability and returns on equity initially, supported by improving net margins despite stable to slightly improving asset turnover and decreasing leverage. However, later periods reflect weakening profit margins, declining asset utilization, and fluctuating leverage, culminating in a significant reduction in ROE. This suggests emerging challenges in maintaining efficiency and profitability that could warrant closer strategic and operational review.

The quarterly financial data exhibits several noteworthy trends in key performance indicators over the observed periods.

Tax Burden

The tax burden ratio is relatively stable from March 2021 onward, maintaining values predominantly between 0.86 and 0.9. This indicates a consistent proportion of earnings retained after tax over the recent years.

Interest Burden

The interest burden ratio shows a gradual decline from 0.97 in early 2021 to approximately 0.91 by late 2025. This downward trend suggests increasing interest expenses relative to earnings before interest and taxes, potentially reflecting rising cost of debt or higher leverage impacts.

EBIT Margin

EBIT margin rose steadily between March 2021 (42.92%) and December 2021 (48.7%), reaching a peak around mid-2022 at above 52%. Subsequently, it experienced a persistent decline, dropping to approximately 36% by late 2025. This decline may imply increasing operational costs or pricing pressures affecting core profitability.

Asset Turnover

Asset turnover ratio initially increased from 0.75 in March 2021 to 0.81 by September 2021, before entering a downward trajectory. From late 2021 onward, the ratio steadily decreased, reaching a low around 0.44 by late 2024, with a modest recovery to about 0.49 by late 2025. The reduction in asset turnover indicates reduced efficiency in using assets to generate sales, which could be linked to either asset base growth or declining sales volume.

Financial Leverage

Financial leverage ratios declined from early 2020 (2.23) through to early 2021 (1.85), implying a reduction in reliance on debt financing. From mid-2021, leverage slightly fluctuated but trended upward again, reaching above 2.1 near the end of the period, indicating a renewed increase in debt utilization or equity changes.

Return on Equity (ROE)

ROE demonstrated very high levels initially, near 60% during 2021, but showed a continuous downward trend thereafter. By late 2025, ROE declined to approximately 30%, reflecting a significant reduction in profitability relative to shareholders' equity. This decline aligns with the deteriorations noted in EBIT margin and asset turnover, suggesting combined impacts of decreasing operational efficiency and leverage changes.

Overall, the data depicts a phase of strong profitability and operational performance during 2021, followed by gradual deterioration in margins, asset efficiency, and returns to equity. Financial leverage movements suggest changes in capital structure that may contribute to the observed shifts in profitability metrics. These trends may point toward emerging challenges in cost control, sales efficiency, and financing costs over the longer term.

The financial ratios for the company demonstrate notable trends over the observed periods, reflecting changes in profitability, efficiency, and asset utilization.

Net Profit Margin (%)

Starting from a value of 38.69% in the quarter ending March 31, 2021, the net profit margin increased gradually, reaching a peak around 44.21% by December 31, 2022. Subsequently, a downward trend is evident, with the margin steadily declining to 29.21% by September 30, 2025. This pattern suggests a period of improving profitability followed by significant contraction in profit margins over the later quarters.

Asset Turnover (ratio)

The asset turnover ratio shows relatively moderate fluctuations around an average range between 0.44 and 0.81. It began near 0.75 in early 2021, peaked at 0.81 in September 2021, and then underwent a gradual decline, reaching a low near 0.44 around September 2024. A minor recovery occurs toward the end of the series, rising to approximately 0.49 by the third quarter of 2025. This indicates a decrease in how efficiently assets were used to generate sales, particularly from late 2021 through 2024, followed by some improvement.

Return on Assets (ROA) (%)

Return on assets followed a similar trend to the net profit margin, starting at 28.91% in March 2021 and increasing to a peak of 34.69% around September 2022. After that, a downward trend prevailed, with ROA decreasing steadily to about 14.41% by September 2025. This denotes diminishing overall profitability relative to asset base in the later periods, reflecting reduced income generation efficiency from the company's assets.

Overall, the company's profitability indicators showed initial improvement followed by a notable decline over the observed periods. Asset turnover decreased, indicating less effective asset utilization, which contributed to the declining returns and margins. The combination of these metrics suggests challenges in maintaining previous levels of profitability and operational efficiency in the most recent years.

Tax Burden

The tax burden ratio demonstrates a relatively stable trend beginning from the first recorded value. It generally remains around 0.86 to 0.88 with minor fluctuations throughout the periods analyzed. A slight increase is noted towards the later periods, reaching approximately 0.89 to 0.90, indicating a marginally higher proportion of earnings retained after taxes in recent quarters.

Interest Burden

The interest burden ratio exhibits a gradual decline over the observed timeframe. Starting near 0.97 to 0.98, it decreases steadily to about 0.91 to 0.92 in the latest quarters. This indicates a rising interest expense relative to earnings before interest and taxes, suggesting potential increases in debt levels or interest costs impacting pre-tax profits.

EBIT Margin

The EBIT margin shows an upward trend in the earlier periods, increasing from approximately 43% to a peak near 52% within the initial quarters. However, following this peak, a consistent decline is observed, with margins dropping steadily to around 36% by the end of the period. This pattern indicates initially improving operational profitability followed by a notable reduction possibly due to rising costs or competitive pressures.

Asset Turnover

Asset turnover ratio initially trends upward, moving from 0.75 to approximately 0.79-0.81 in the earlier quarters, reflecting improved efficiency in utilizing assets to generate sales. Subsequently, a pronounced decline occurs, reaching lows around 0.44 to 0.48 in the most recent periods. This decreasing trend suggests a slowdown in asset utilization efficiency or potential increases in asset base not matched by sales growth.

Return on Assets (ROA)

Return on assets mirrors the general pattern observed in other profitability metrics. ROA increases initially from around 29% to a peak above 34%, indicating strong asset-based profitability early in the analyzed periods. Following this peak, ROA declines steadily to approximately 14% by the latest quarters. This diminishing return reflects the combined effect of declining operational margins and reduced asset turnover, signaling challenges in achieving prior profitability levels from the asset base.

The analysis of the quarterly financial ratios reveals distinct patterns and gradual shifts in the company's profitability and burden metrics over the observed periods.

Tax Burden

The tax burden ratio has remained relatively stable, hovering around 0.86 to 0.90 since the first recorded value. Starting at 0.93, it slightly decreased to approximately 0.86-0.88 in subsequent periods, showing marginal fluctuations but no significant trend towards increase or decrease. This indicates a consistent tax expense relative to pre-tax income, suggesting stable tax management or taxation policies.

Interest Burden

The interest burden ratio demonstrates a gradual declining trend over the periods. Beginning around 0.97-0.98 levels, it steadily decreased to about 0.91 by the last recorded quarters. This reduction implies a slight increase in interest expenses relative to earnings before interest and taxes, possibly indicating increased leverage or higher interest costs.

EBIT Margin

The EBIT margin shows a clear downward trend after an initial rise. It increased from approximately 42.92% and peaked around 52.16% but then progressively decreased to roughly 36.08%. This decline over time suggests reduced operational profitability before interest and taxes, possibly due to increased costs, pricing pressures, or changes in business conditions affecting core profitability.

Net Profit Margin

The net profit margin follows a similar pattern to the EBIT margin. It began at about 38.69%, improved to a peak near 44.21%, then steadily declined to 29.21%. This consistent fall indicates a reduction in profitability available to shareholders after all expenses, taxes, and interests. The decline aligns with lower EBIT margins and increased interest burden, influencing the reduced net profitability.

In summary, the company experienced stable tax burden ratios but a gradual increase in the interest burden over the evaluated periods. Both EBIT and net profit margins improved initially but faced a steady decline thereafter, signaling diminishing profitability trends. These patterns suggest the need for closer examination of operational efficiencies and financial cost management to counteract the negative movements in profitability.