Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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- Income Statement
- Statement of Comprehensive Income
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
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Profitability Ratios (Summary)
Texas Instruments Inc., profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The profitability metrics demonstrate a consistent decline across the observed period. While initially strong, each measured ratio exhibits a downward trajectory from 2021 through 2025, although the rate of decline appears to moderate in the later years for some indicators.
- Gross Profit Margin
- The gross profit margin experienced a decrease from 67.47% in 2021 to 57.02% in 2025. The most significant reduction occurred between 2022 and 2023, falling from 68.76% to 62.90%. The rate of decline slowed between 2023 and 2025, suggesting potential stabilization, but remains negative overall.
- Operating Profit Margin
- A similar downward trend is evident in the operating profit margin, decreasing from 48.84% in 2021 to 34.06% in 2025. The largest single-year decrease was observed between 2022 and 2023, with a drop of 8.78 percentage points. The decline from 2023 to 2024 was more pronounced than the decline from 2024 to 2025.
- Net Profit Margin
- The net profit margin followed the same pattern, declining from 42.35% in 2021 to 28.28% in 2025. The reduction mirrors the operating margin, with a substantial decrease between 2022 and 2023, and a continued, though lessening, decline in subsequent years.
- Return on Equity (ROE)
- Return on equity exhibited a substantial decrease, moving from 58.27% in 2021 to 30.73% in 2025. The most significant drop occurred between 2021 and 2023, falling from 58.27% to 38.53%. A slight recovery is observed between 2024 and 2025, but the overall trend remains negative.
- Return on Assets (ROA)
- Return on assets also decreased over the period, from 31.48% in 2021 to 14.46% in 2025. The decline was most rapid between 2022 and 2023, and again between 2023 and 2024. The decrease from 2024 to 2025 is smaller, indicating a potential slowing of the downward trend.
Collectively, these ratios suggest a diminishing ability to generate profits from both sales and invested capital. The consistent decline across all metrics warrants further investigation into the underlying causes, such as increased costs, pricing pressures, or changes in asset utilization.
Return on Sales
Return on Investment
Gross Profit Margin
Texas Instruments Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin exhibited a fluctuating pattern over the five-year period. Initially, the metric demonstrated growth, followed by a consistent decline, and a slight recovery in the most recent year.
- Gross Profit Margin Trend
- In 2021, the gross profit margin stood at 67.47%. This increased to 68.76% in 2022, representing the highest value observed during the analyzed timeframe. A subsequent decrease was noted in 2023, with the margin falling to 62.90%. This downward trend continued into 2024, reaching 58.14%, the lowest point in the series. The most recent year, 2025, showed a modest recovery, with the gross profit margin increasing to 57.02%.
The gross profit itself also showed variability. While increasing from 2021 to 2022, it decreased in subsequent years before showing a slight increase in 2025. However, the rate of decline in gross profit margin outpaced the decline in gross profit, indicating potential pressures on input costs or pricing strategies.
- Relationship to Revenue
- Revenue followed an initial upward trajectory, peaking in 2022 at US$20,028 million. It then experienced a decline, reaching US$15,641 million in 2024, before partially recovering to US$17,682 million in 2025. The decreasing gross profit margin alongside declining revenue suggests that the company faced challenges in maintaining profitability as sales decreased.
The observed decline in gross profit margin warrants further investigation to determine the underlying causes. Potential factors could include increased cost of goods sold, changes in product mix, or increased competitive pressures impacting pricing power.
Operating Profit Margin
Texas Instruments Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating profit | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Operating Profit Margin, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Operating profit margin = 100 × Operating profit ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited a fluctuating pattern over the five-year period. Initially, the metric demonstrated growth, followed by a substantial decline, and then a period of relative stabilization at a lower level.
- Operating Profit Margin Trend
- In 2021, the operating profit margin stood at 48.84%. This increased to 50.63% in 2022, representing the highest point within the observed timeframe. A significant decrease was then recorded in 2023, with the margin falling to 41.85%. This downward trend continued into 2024, reaching 34.94%. The decline moderated in 2025, with the operating profit margin stabilizing at 34.06%.
The changes in operating profit margin appear to correlate with fluctuations in both operating profit and revenue. While operating profit increased from 2021 to 2022, the subsequent declines in operating profit from 2022 to 2024 were more pronounced, contributing to the observed margin compression. Revenue also decreased from 2022 to 2024, further exacerbating the decline in the operating profit margin. A slight revenue increase in 2025 did not result in a significant recovery of the operating profit margin, suggesting that cost pressures or other factors may be influencing profitability.
- Relationship to Operating Profit and Revenue
- The operating profit margin’s peak in 2022 coincided with both the highest operating profit and the highest revenue figures during the period. The subsequent declines in both operating profit and revenue directly contributed to the decreasing margin. The stabilization of the margin in 2025, despite a modest revenue increase, indicates that operating profit did not grow proportionally.
The observed trend suggests a weakening of the company’s ability to translate revenue into operating profit over the period. Further investigation into the underlying drivers of cost of goods sold and operating expenses would be necessary to fully understand the factors contributing to the margin compression.
Net Profit Margin
Texas Instruments Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Net Profit Margin, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net profit margin = 100 × Net income ÷ Revenue
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited a fluctuating pattern over the five-year period. Initially, the metric demonstrated growth, followed by a consistent decline.
- Net Profit Margin Trend
- In 2021, the net profit margin stood at 42.35%. This increased to 43.68% in 2022, representing the highest value observed during the analyzed timeframe. A subsequent decrease was noted in 2023, with the margin falling to 37.16%. This downward trend continued into 2024, where the net profit margin reached 30.68%, and further declined to 28.28% in 2025.
The observed decline in net profit margin, particularly from 2022 onwards, suggests a weakening in the company’s ability to translate revenue into profit. This could be attributable to several factors, including increased operating expenses, pricing pressures, or shifts in the product mix towards lower-margin offerings. The simultaneous decrease in revenue in 2023 and 2024, coupled with the declining margin, indicates potential challenges in maintaining profitability during periods of lower sales volume.
- Relationship to Revenue
- While revenue increased from 2021 to 2022, the net income also increased, resulting in a higher net profit margin. However, despite revenue decreasing in 2023 and 2024, the net income decreased at a faster rate, leading to a significant reduction in the net profit margin. The slight revenue increase in 2025 did not fully offset the impact of the continued decline in net income, resulting in a further decrease in the net profit margin.
The consistent decrease in the net profit margin from 2022 to 2025 warrants further investigation to identify the underlying causes and assess the sustainability of the company’s profitability.
Return on Equity (ROE)
Texas Instruments Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| ROE, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| ROE, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The return on equity (ROE) exhibited a fluctuating pattern over the five-year period. Initially, the metric demonstrated growth, followed by a substantial decline and a subsequent partial recovery.
- Overall Trend
- ROE began at 58.27% in 2021 and increased to a peak of 60.02% in 2022. A significant decrease was then observed, with ROE falling to 38.53% in 2023 and further to 28.39% in 2024. A modest increase to 30.73% occurred in 2025, but the value remained below the levels seen in 2021 and 2022.
- Net Income Influence
- Net income increased from US$7,769 million in 2021 to US$8,749 million in 2022, coinciding with the initial rise in ROE. However, net income subsequently decreased to US$6,510 million in 2023, US$4,799 million in 2024, and stabilized at US$5,001 million in 2025. This decline in net income appears to be a primary driver of the observed decrease in ROE.
- Stockholders’ Equity Influence
- Stockholders’ equity consistently increased from US$13,333 million in 2021 to US$16,897 million in 2023. The increase slowed in 2024, with equity remaining relatively flat at US$16,903 million, and then decreased slightly to US$16,273 million in 2025. While equity generally increased, its impact on ROE was offset by the more substantial fluctuations in net income.
- Combined Effect
- The decrease in ROE from 2022 to 2024 suggests that the decline in net income outweighed the positive influence of growing stockholders’ equity. The slight recovery in ROE in 2025 is attributable to a stabilization of net income, despite a concurrent decrease in equity.
The observed trend indicates a weakening in the company’s ability to generate profit from shareholder investments between 2022 and 2024, with a limited recovery in the most recent year.
Return on Assets (ROA)
Texas Instruments Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| ROA, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| ROA, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited a notable pattern over the five-year period. Initially, the ROA demonstrated strength, followed by a significant decline and a subsequent stabilization. Net income fluctuated during the period, while total assets consistently increased until the final year, influencing the observed ROA trends.
- Overall Trend
- The ROA peaked in 2022 at 32.16% before experiencing a substantial decrease in subsequent years. While a decline began in 2023, the rate of decrease slowed between 2023 and 2025, suggesting a potential stabilization.
- Initial Growth (2021-2022)
- From 2021 to 2022, the ROA increased from 31.48% to 32.16%. This growth coincided with an increase in net income and total assets, indicating improved profitability relative to the asset base. The increase in net income was the primary driver of the ROA improvement.
- Significant Decline (2022-2023)
- A marked decline in ROA occurred between 2022 and 2023, falling to 20.12%. This decrease was primarily attributable to a more substantial reduction in net income, despite a continued increase in total assets. The increase in the asset base, without a corresponding increase in net income, diluted the return generated by those assets.
- Continued Decline and Stabilization (2023-2025)
- The ROA continued to decrease from 2023 to 2024, reaching 13.51%. However, the decline was less pronounced than the previous year. In 2025, the ROA experienced a slight increase to 14.46%, suggesting a potential leveling off. Total assets increased from 2023 to 2024, but decreased slightly in 2025, while net income showed a modest increase in 2025. These factors contributed to the stabilization of the ROA.
- Asset and Income Relationship
- The relationship between net income and total assets is critical to understanding the ROA trend. While total assets consistently grew for the majority of the period, the ROA’s performance was heavily influenced by fluctuations in net income. The largest ROA decline occurred when net income decreased significantly while assets continued to rise.