Workday Inc. (NASDAQ:WDAY)

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

Return on Assets (ROA)

The ROA exhibited a negative trend initially, reaching its lowest point around early 2020 with approximately -7.23%. Following this, there was a gradual improvement, turning positive by early 2021. The ratio saw fluctuations but generally improved, peaking above 9% in early 2024. After this peak, ROA experienced a decline but remained positive, settling around 3% toward mid-2025. This trend indicates an initial struggle with asset profitability, followed by a recovery and stabilization at a moderate positive level.

Financial Leverage

The financial leverage ratio showed a gradual downward trend across the entire period. Starting above 2.8 in early 2019, it decreased steadily to below 2.0 by mid-2024, with minor fluctuations. This suggests a consistent reduction in the company's reliance on debt relative to equity, reflecting a possible shift toward a more conservative capital structure or improved equity financing.

Return on Equity (ROE)

The ROE mirrored the pattern observed in ROA but with higher volatility and magnitude. It began deeply negative around -20% in early 2020, indicating substantial losses relative to equity. Thereafter, ROE improved, crossing into positive territory by early 2021, experiencing some fluctuations, and then rising sharply to nearly 19% in early 2024. Subsequently, a decrease ensued, though the ratio stayed positive, ending near 6% in mid-2025. This trajectory suggests a recovery in shareholder value creation following periods of loss, with some recent moderation.

Net Profit Margin

The net profit margin displays a generally improving trend over the observed periods. Initially, it shows significant negative values starting from -13.25% in January 2020, deepening slightly around mid-2020 before gradually increasing towards profitability. By July 2021, the margin turns positive and fluctuates near zero for several quarters thereafter. Notably, beginning in January 2024, there is a marked improvement with net profit margin surging to approximately 19%, before moderating to about 6% by mid-2025. This pattern indicates a recovery phase from sustained losses to solid profitability and then some stabilization at a positive level.

Asset Turnover

The asset turnover ratio remains relatively stable throughout the timeline, fluctuating narrowly between 0.42 and 0.53. Early periods around 2020 indicate a level close to 0.53, followed by a slight dip in mid-2022 to a low of 0.42. Afterward, the ratio exhibits a mild recovery and oscillates around 0.48 to 0.5 until mid-2025. This stability suggests consistent efficiency in using assets to generate revenue, with no significant deterioration or improvement over the years.

Financial Leverage

Financial leverage shows a clear declining trend from 2.85 reported in April 2019 to approximately 1.9-2.0 in the latest quarters around 2024-2025. This progressive reduction reflects a decreasing reliance on debt financing or a shift towards equity financing. The steady decline over the periods suggests an intentional strategy to lower leverage risk and improve financial stability.

Return on Equity (ROE)

ROE mirrors the trajectory of net profit margin with an initial phase of significant negative returns, reaching nearly -20% in mid-2020. Subsequently, it improves steadily, crossing into positive territory near mid-2021. A pronounced increase occurs in early 2024, peaking near 18-19%, followed by a decline to around 5-6% in mid-2025. This pattern indicates the company's recovery from losses towards strong profitability and a recent period of moderation, likely reflecting the net profit margin dynamics and the effect of decreasing financial leverage.

The financial data over the observed periods reveals notable trends in profitability, efficiency, and asset utilization.

Net Profit Margin (%)

The net profit margin showed a consistent improvement trajectory starting from significant negative values around -13.25% in early 2020, gradually rising to near breakeven points by early 2022. Although there was some volatility with marginal negative dips between 2022 and early 2023, a substantial positive surge occurred beginning mid-2023, peaking near 19.87% in early 2024. This peak, however, was followed by a decline to approximately 5.6%-6.51% by mid to late 2025, indicating some profit margin contraction but remaining positive and substantially improved compared to the initial periods.

Asset Turnover (ratio)

The asset turnover ratio remained relatively stable throughout the period, fluctuating mildly within a narrow range from around 0.42 to 0.53. The data did not indicate any significant upward or downward trends, suggesting consistent efficiency in using assets to generate revenue over time, despite some small variations that might reflect operational adjustments or external influences.

Return on Assets (ROA) (%)

ROA mirrored the net profit margin trends, beginning at negative values near -7% in early 2020 and showing incremental improvement up to positive territory by the closing months of 2021. This improvement faced interruptions with minor reversals into negative figures through early 2023 but subsequently experienced a marked rise, reaching peaks of around 9.87% in early 2024. As with net profit margin, ROA declined afterward but stayed above earlier negative levels, stabilizing around 2.83%-3.25% by late 2025. The pattern suggests improved asset profitability with some volatility, aligned with fluctuations in net profitability.

In summary, the company exhibited a significant turnaround in profitability metrics from deep losses to solid gains within the observed timeframe, accompanied by steady asset utilization. Although both net profit margin and ROA saw some fluctuations following their peaks, overall improvements indicate enhanced operational and financial performance. Asset turnover stability implies that operational efficiency in revenue generation relative to asset base was maintained throughout, supporting the profitability recovery observed.