Texas Instruments Inc. (NASDAQ:TXN)

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

Return on Assets (ROA)

The ROA shows a notable rise from early 2021, increasing from approximately 31.44% in March 2021 and peaking near 34.69% around mid-2022. Following this peak, there is a clear and sustained downward trend, with ROA declining steadily through 2023 and into 2024, reaching a low around 13.51% by the end of 2024. A slight stabilization or minor improvement is observed towards early 2025, with values holding near 14.4%. This trajectory indicates an initial strengthening in asset profitability, followed by a significant reduction in returns generated from assets over the latter part of the period.

Financial Leverage

The financial leverage ratio fluctuates mildly throughout the period. Starting at about 1.93 in early 2021, the ratio experiences slight decreases and rises around a range of 1.75 to 1.92 during 2021 and 2022, suggesting moderate adjustments in the use of debt relative to equity. From late 2023 onward, leverage increases moderately, reaching levels slightly above 2.0, peaking around 2.13 in mid-2025. This gradual increase in leverage indicates a trend towards greater reliance on debt financing or an increased overall asset base relative to equity.

Return on Equity (ROE)

ROE maintains elevated levels early in the period, starting near 60.73% in early 2021 and remaining relatively stable through mid-2022 with minor variability. However, from late 2022, there is a pronounced and consistent decline in ROE, falling sharply to approximately 28.39% by the end of 2024. Early 2025 shows a mild recovery or stabilization, with ROE values around 30%. This substantial decrease mirrors the trend in ROA, reflecting decreasing profitability from the shareholders' perspective, possibly influenced by declining asset returns as well as shifting leverage.

Overall, the financial ratios highlight a period of strong profitability and efficient asset use in the first half of the timeline, followed by a marked deterioration in asset profitability and equity returns in the latter half. The gradual increase in financial leverage towards the end suggests a strategic shift or response to changing profitability conditions. These trends may warrant further investigation into operational efficiencies, market conditions, or capital management policies contributing to these shifts.

Net Profit Margin

The net profit margin exhibited an upward trend from 40.04% at the beginning of 2021, peaking at 44.21% in the third quarter of 2022. Following this peak, a consistent decline is observed, with the margin decreasing to 29.21% by the third quarter of 2025. This indicates a reduction in profitability relative to revenue over the latter periods.

Asset Turnover

Asset turnover showed fluctuations with an initial moderate level of around 0.79–0.81 in early 2021, dropping gradually through 2023 to a low of approximately 0.44–0.46 by late 2024. A slight recovery is noted towards 0.49 by the third quarter of 2025. Overall, the data reflects a weakening in asset efficiency that starts to improve slightly near the end of the period.

Financial Leverage

Financial leverage remained relatively stable with minor variations, starting near 1.93 and slightly declining to around 1.75 in mid-2022. From late 2022 onwards, leverage trends upward, reaching levels above 2.1 by mid-2025, suggesting an increasing reliance on debt or other liabilities to finance assets over time.

Return on Equity (ROE)

Return on equity mirrored the pattern seen in net profit margin. It maintained a high level above 58% through 2021 and most of 2022, reaching up to 61.52%. Subsequently, ROE declined markedly to around 28.39% by late 2024, with a small recovery to approximately 30.73% by mid-2025. This downward trend reflects diminishing profitability relative to shareholder equity.

The financial analysis over the observed periods reveals several notable trends in profitability, operational efficiency, and leverage.

Tax Burden

The tax burden ratio remains relatively stable throughout the periods, fluctuating slightly between 0.86 and 0.90. This steadiness suggests consistent effective tax rates with minimal volatility, indicating predictable tax-related financial impacts.

Interest Burden

The interest burden ratio shows a gradual decline from approximately 0.98 to around 0.91 towards the most recent periods. This trend indicates a slight increase in interest expenses relative to earnings before interest and taxes, potentially raising the cost of debt financing or reflecting higher interest expenses.

EBIT Margin

The EBIT margin exhibits a peak near the end of 2021 and early 2022, around 52%, then undergoes a consistent downward trend, reaching close to 36% in the latest period. This decline suggests diminishing operational profitability, which may be driven by rising costs, pricing pressures, or changes in product mix affecting earnings before interest and taxes.

Asset Turnover

Asset turnover ratios show a peak around mid-2022 at approximately 0.79 to 0.81, followed by a marked and steady decline down to the range of 0.44 to 0.49 in the most recent time frames. This decreasing trend indicates reduced efficiency in utilizing assets to generate revenue, highlighting a potential challenge in operational asset management or lower sales volumes relative to asset base.

Financial Leverage

Financial leverage ratios have generally increased from around 1.75 up to values slightly above 2.1 towards the later periods. This escalation indicates increased reliance on debt relative to equity, which may amplify returns but also elevates financial risk due to higher fixed financial obligations.

Return on Equity (ROE)

ROE starts very high at over 60% in the early periods but demonstrates a consistent decrease to around 30% in the latest quarters. Despite remaining at a relatively strong level, the halving of ROE over time signals reduced effectiveness in generating shareholder returns, influenced by weakening profitability, declining asset efficiency, and higher leverage.

In summary, the company presents a pattern of declining profitability and asset utilization efficiency, accompanied by increasing financial leverage and a decreasing trend in return on equity. These shifts may warrant focused management attention to operational performance improvements and careful management of financial risk.

The analysis of the quarterly financial ratios reveals significant trends and shifts over the observed periods. Net Profit Margin demonstrates a rising trend initially, peaking around December 2022, followed by a consistent decline towards March 2025. This suggests that while the company was increasingly efficient at converting revenue into profit during the earlier periods, profitability pressures intensified in later periods, reducing this margin.

Asset Turnover shows a fluctuating but general downward trend over the timeline. Early quarters indicate ratios near or above 0.75, while recent quarters retreat to values around 0.44 to 0.49. This decline implies decreasing efficiency in utilizing assets to generate sales, potentially signaling issues with asset management or slower sales growth relative to asset base expansion.

Return on Assets (ROA) initially increases, reaching a peak around mid-2022, then steadily decreases through to the end of the observed data. The decline in ROA mirrors the downward trends in both Net Profit Margin and Asset Turnover, underscoring a reduction in overall asset profitability. The diminished ROA suggests the company is generating less profit per dollar of assets invested, which may result from operational challenges or capital allocation inefficiencies.

Overall, the combined data indicates that after a period of improving profitability and asset efficiency, there has been a notable deterioration in these key performance indicators. The company appears to face growing challenges in maintaining profit margins and asset utilization, which has progressively impacted its returns on assets.

Net Profit Margin

Increased from about 40% to a peak near 44% by late 2022, then declined steadily to below 30% by early 2025, indicating reduced profitability per unit of sales in recent quarters.

Asset Turnover

Experienced a gradual reduction from approximately 0.79 down to around 0.44–0.49, reflecting decreased efficiency in generating sales from assets over time.

Return on Assets (ROA)

Climbed from roughly 31% to nearly 35% mid-2022, then declined sharply to approximately 14% by early 2025, pointing to a significant drop in the company’s ability to convert assets into net earnings.

The financial data reveals several notable trends over the periods analyzed. Profitability margins and efficiency metrics exhibit distinct trajectories that suggest changing operating conditions and asset utilization.

Tax Burden

The tax burden ratio remains relatively stable throughout the periods, fluctuating minimally between 0.86 and 0.92. This stability indicates a consistent effective tax rate, with a slight upward movement near the end of the timeframe, trending around 0.88 to 0.9.

Interest Burden

The interest burden ratio demonstrates a gradual decline from 0.97 to approximately 0.91 over the periods. This steady decrease implies an increasing impact of interest expenses on earnings before taxes, potentially indicating rising debt costs or leverage.

EBIT Margin

The EBIT margin shows an initial improvement in the early periods, rising from about 44.89% to a peak slightly above 52%. Subsequent quarters depict a consistent decline, with margins falling to 36.08% by the last period. This downward trend suggests decreasing operational profitability over time, which may be due to increasing costs or competitive pressures.

Asset Turnover

Asset turnover ratios indicate a decrease in efficiency in generating sales from assets, moving from a high near 0.81 to lows around 0.44-0.48 towards the later periods. This decrease signals diminishing effectiveness in asset utilization.

Return on Assets (ROA)

ROA follows a generally declining trajectory, dropping from over 31% to approximately 14% by the end of the timeframe. This sharp decline reflects the combined effects of lower EBIT margins and reduced asset turnover, resulting in significantly less profit generated per unit of asset employed.

In summary, the data indicates a period of robust profitability and efficiency in the early quarters, followed by weakening operational margins and lower asset efficiency. The increasing interest burden suggests potential cost pressures from financing, while the stable tax burden adds predictability in net profitability calculations. Taken together, these trends point to challenges in maintaining previous profitability levels and asset productivity over the analyzed periods.

The financial ratios exhibit distinct trends over the observed periods, reflecting changes in the company's profitability and cost structure.

Tax Burden Ratio

The tax burden ratio has remained relatively stable, fluctuating slightly around the 0.86 to 0.90 range. From early 2021 through mid-2024, the ratio mostly hovers between 0.86 and 0.88, indicating a consistent effective tax rate relative to pretax earnings. In the latest periods ending in 2025, a modest upward shift is observed, reaching as high as 0.90 and stabilizing around 0.89, suggesting a slight increase in tax impact on net income.

Interest Burden Ratio

The interest burden ratio shows a gradual declining trend over time. Starting near 0.97-0.98 in 2021 and 2022, it steadily decreases to a low of approximately 0.91 in late 2024 and throughout 2025. This indicates a rising interest expense relative to earnings before interest and taxes or potentially an incremental financial burden, which could slightly erode pre-tax profitability.

EBIT Margin

The EBIT margin demonstrates a clear downward trend. The margin peaked around 52.16% in the third quarter of 2022 but has steadily declined since then, dropping to approximately 36.08% by the third quarter of 2025. This contraction suggests that operating profitability has weakened, possibly due to increased costs, pricing pressures, or changes in product mix affecting operating income relative to revenue.

Net Profit Margin

The net profit margin trend aligns with the EBIT margin decline but shows a more moderate reduction. Starting at 40.04% in early 2021, the margin rose to about 44.21% in late 2022 before a consistent decrease to 29.21% by the third quarter of 2025. The reduction in net margin reflects the combined impact of declining operating profitability, increasing interest expenses as noted, and taxes that have modestly risen in relative weight.

Overall, the data indicates that while the company maintained strong profitability margins through 2021 and the first half of 2022, operating efficiency and profitability have eroded progressively in the subsequent quarters. Increased financial charges and a slightly higher tax burden have also contributed to the decline in net profitability. These trends could warrant further examination into cost management, pricing strategy, and capital structure to understand underlying drivers and to mitigate margin compression going forward.