Air Products & Chemicals Inc. (NYSE:APD)

The financial performance indicators of the company reveal notable fluctuations and trends during the observed periods.

Return on Assets (ROA)

The ROA displayed considerable volatility with an initial low around 3.3% to 3.6% during 2016, followed by a sharp increase reaching approximately 17.7% in early 2017. Subsequently, the ROA gradually declined and stabilized between roughly 7.2% and 9.6% from late 2017 through mid-2021. This suggests a period of enhanced asset utilization efficiency in early 2017, which later normalized to a more consistent but lower level.

Financial Leverage

Financial leverage showed a declining trend from above 2.3 in late 2015 and 2016 to a trough near 1.7 between 2017 and 2019, indicating reduced reliance on debt financing during that interval. However, starting around mid-2020, leverage increased again to just above 2.0, which may reflect a strategic shift towards higher debt or changes in capital structure in response to the economic conditions.

Return on Equity (ROE)

ROE mirrored the ROA pattern but with more pronounced fluctuations, starting under 10% in 2016, peaking sharply above 30% in early 2017, and then decreasing to a range between approximately 14.8% and 17.1% from 2018 onward. The peak in ROE around 2017 coincided with the highest ROA values and reduced financial leverage, indicating strong profitability and efficient equity utilization during that period. The subsequent stabilization suggests consistent profitability but at lower levels than the peak.

In summary, the company exhibited a period of strong profitability and efficient asset management in early 2017, accompanied by lower leverage. Following this peak, profitability metrics moderated and stabilized, while financial leverage decreased initially but showed signs of increasing again in the most recent periods. These patterns may reflect shifts in operational performance and capital structure over time.

Net Profit Margin

The net profit margin experienced notable fluctuations over the analyzed periods. Initially, it was moderate around 13.59% at the end of 2015, dipping significantly to approximately 5.8-6.63% throughout 2016. A sharp increase occurred in early 2017, with margins rising above 30%, peaking at around 36.65% in the third quarter of 2017. Following this peak, the margin declined substantially in 2018 to levels around 13-19%, then stabilized in the range of 18-21% from 2019 through mid-2021, indicating improved profitability consistency after the earlier volatility.

Asset Turnover

Asset turnover remained relatively stable but showed a gradual declining trend. Starting near 0.56 in late 2015, it slightly decreased to about 0.44-0.47 through 2016 and 2017, suggesting a marginal reduction in asset efficiency. The ratio hovered around 0.46-0.47 up to early 2020 before experiencing a more pronounced drop to approximately 0.34-0.37 by mid-2021. This decline may indicate reduced effectiveness in utilizing assets to generate revenue over time.

Financial Leverage

Financial leverage demonstrated variability with a downward tendency. Beginning at 2.34 in late 2015, the ratio initially increased slightly, peaking at 2.55 in the third quarter of 2016. Afterward, it steadily decreased throughout 2017 and 2018, reaching lows around 1.70-1.78. However, from 2020 onward, financial leverage rose again moderately to just above 2.0, indicating increased reliance on debt or liabilities to finance assets during that period.

Return on Equity (ROE)

Return on equity followed a pattern consistent with net profit margin and financial leverage trends. It started relatively strong around 17.88% at the end of 2015 but fell below 9% through much of 2016. A significant increase took place in early 2017 with ROE surpassing 30%, then declining steadily throughout 2018 and stabilizing near 15-17% from 2019 through mid-2021. The interplay of improved profit margins and leverage ratios influenced these ROE variations, reflecting changes in overall shareholder profitability.

Tax Burden

The tax burden ratio exhibited notable fluctuations over the observed periods. Initially, it started at 0.75 and then decreased to around 0.51-0.53 for several quarters in 2016, indicating a lower effective tax rate. A sharp increase was observed in early 2017, with values peaking near 0.92 in the third quarter. In the following years, the ratio stabilized mostly between 0.79 and 0.82, suggesting a relatively consistent tax impact on income.

Interest Burden

The interest burden remained fairly stable throughout the periods, mostly hovering between 0.90 and 0.97. This stability indicates a steady cost of debt and consistent interest expenses relative to earnings before interest and taxes.

EBIT Margin

The EBIT margin showed considerable volatility initially, dropping from 19.18% to approximately 13-14% during 2016, then surging dramatically in early 2017 to exceed 40%. After this peak, margins moderated to a range of approximately 19-28% across subsequent years, with a general upward trend from 2018 onwards, peaking near 28.5% in 2020. This suggests periods of significantly improved operating profitability followed by stabilization at a higher margin level.

Asset Turnover

Asset turnover ratios started at about 0.56 and remained relatively stable around the mid-0.40s for several years. A decline was notable from 2019 onward, dropping to as low as 0.34-0.36 at various points in 2020 and 2021. This decline signals a reduced efficiency in generating sales from assets during the most recent periods.

Financial Leverage

Financial leverage exhibited a downward trend from roughly 2.5 in early 2016 to around 1.7 by 2019, indicating reduced reliance on debt financing or a decrease in asset-to-equity ratio. However, starting in late 2019 and through 2020, leverage increased again to above 2.0, before slightly declining but remaining above the levels seen in 2018. This pattern reflects changes in capital structure, potentially linked to strategic financing decisions or market conditions.

Return on Equity (ROE)

ROE mirrored some of the trends observed in profitability and leverage measures. Initial values were modest, between 7.9% and 9% during 2016, then surged dramatically to above 30% in 2017. Following this peak, ROE declined sharply to around 10-14% by 2018 but then showed a gradual recovery, reaching around 15% by 2021. This indicates that the company experienced periods of high profitability and efficient equity use, followed by normalization and moderate growth in shareholder returns in recent years.

Net Profit Margin

The net profit margin exhibits notable fluctuations over the analyzed periods. From the end of 2015 through 2016, the margin remains relatively low, fluctuating between 5.8% and 6.63%. A significant and sharp increase is observed starting in the first quarter of 2017, with values surging above 30%, reaching a peak of approximately 36.65% in the third quarter of 2017. This elevated margin level sustains through the end of 2017. Subsequently, from 2018 onward, the margin stabilizes at a more moderate level, fluctuating mostly in the range of approximately 17% to 21%, showing a generally stable and slight upward trend through 2019 and into early 2020. Despite the onset of the pandemic period starting in early 2020, the net profit margin remains reasonably consistent, marginally declining but sustaining levels above 20% before slightly dipping toward 20% by mid-2021.

Asset Turnover

Asset turnover shows a mild declining trend throughout the entire period. Initially, in late 2015 to early 2016, the ratio remains near 0.56 to 0.57, indicating relatively efficient use of assets to generate sales. From 2017 onward, a gradual decrease is observed, with values falling below 0.5 and continuing to decline, reaching a low of approximately 0.34 in the second quarter of 2020. There is a slight recovery toward mid-2021 with the ratio inching upward to 0.37. Overall, this trend suggests a reduction in the efficiency with which the company is utilizing its assets to drive revenue over time.

Return on Assets (ROA)

The return on assets follows patterns similar to net profit margin with distinct phases. Early periods up to the end of 2016 show a low ROA around 3.3% to 3.6%. A sharp increase is evident during 2017, reaching levels above 16%, before declining somewhat in late 2017. In 2018 and 2019, ROA stabilizes somewhat, fluctuating between 7.8% and 9.6%, portraying moderate returns on asset investments. The onset of the pandemic corresponds with a decline in ROA, with values dropping to near 7.2% by mid-2021, indicating a reduced efficiency in asset profitability. The trend in ROA overall suggests improved asset utilization during 2017, followed by a normalization and slight deterioration during the pandemic period.

The analysis of the quarterly financial ratios reveals several notable trends and fluctuations over the observed periods.

Tax Burden

The tax burden ratio experienced marked variability, starting at 0.75 in late 2015, dropping significantly to around 0.51-0.53 in early to mid-2016, then sharply increasing to near 0.9 levels through 2017. Thereafter, it stabilized mostly between 0.7 and 0.8, maintaining a steady course through to mid-2021. This pattern indicates oscillations in effective taxation impacting net profitability but settling into a more consistent range over recent years.

Interest Burden

The interest burden ratio remained fairly stable throughout, ranging predominantly between 0.90 and 0.97. Minor fluctuations suggest consistent management of interest expenses relative to earnings before tax, reflecting stable financing costs or debt structures across the quarters without significant volatility.

EBIT Margin

This ratio underwent significant swings, commencing at approximately 19% in late 2015 and declining to near 13-14% by late 2016. A remarkable spike occurred in early 2017, elevating the margin over 40%, before it reverted back to a range from roughly 19% to the mid-20s in subsequent years. From 2018 onward, the EBIT margin demonstrated a gradual upward trend, reaching a peak near 27% by late 2019, then maintaining levels in the mid-20s through to mid-2021. This volatile movement suggests periods of fluctuating operating efficiency and profitability impacted by one-time events or shifts in business operations.

Asset Turnover

The asset turnover ratio displayed a gentle decline over time. From initial values around 0.56-0.57 in 2015-2016, it decreased gradually to the mid-0.4 range from 2017 through 2019, and dipped further to approximately 0.34-0.37 by mid-2021. This decline signals a reduced efficiency in utilizing assets to generate revenue, potentially reflecting either increased asset base or slowing sales performance relative to assets.

Return on Assets (ROA)

ROA patterns closely followed the fluctuations seen in EBIT margin, given its dependence on profitability and asset efficiency. It started at about 7.63% at the end of 2015, dropped below 4% in 2016, surged above 16% during 2017, and then settled around 8-9% through 2018 and 2019. A moderate decrease occurred during 2020, attributed possibly to external economic factors, with values around 7%, before a slight recovery to above 7.5% by mid-2021. This indicates the company's varying ability to generate returns from its asset base, influenced by operational performance and external conditions.

The financial ratios indicate several notable trends over the examined quarters. The Tax Burden ratio displays significant variability, starting at 0.75 at the end of 2015, dropping to a low near 0.51-0.53 in the first half of 2016, then increasing sharply above 0.86 in late 2017 before stabilizing around the 0.8 level from 2018 onward. This suggests that the effective tax rate experienced fluctuations initially but then settled at a relatively stable level in recent periods.

The Interest Burden ratio remains relatively stable throughout the period, fluctuating mildly between approximately 0.90 and 0.97. This stability reflects consistent interest expense management relative to earnings before interest and taxes, indicating stable financing costs or leverage over time.

The EBIT Margin shows considerable variation, with a notably low range around 11-14% during 2016, followed by a pronounced increase peaking at above 43% in early 2017. After this spike, the margin was somewhat volatile through late 2017 and early 2018 but subsequently demonstrated a steady upward trend from mid-2018 through mid-2021, reaching around 26%. This trend suggests improved operational efficiency and profitability over the latter periods.

The Net Profit Margin similarly exhibits significant fluctuations. Initially, it remained low at around 5.8-6.6% during 2016, then surged dramatically to over 36% in early to late 2017. Following this period, the margin declined to roughly 13% at the end of 2017 but maintained a rising trajectory afterward, reaching above 20% from 2019 onward. This pattern aligns with the EBIT margin trend and indicates enhanced overall profitability, potentially driven by operational gains and tax or financing effects.

Overall, the data reveals a period of volatility in taxes and profit margins during 2016 and 2017, followed by a phase of stabilization and gradual improvement in operational and net profitability metrics. Interest burden remained relatively constant, suggesting steady finance cost management. The consistent upward trends in EBIT and Net Profit Margins in the later years imply successful strategic or operational measures enhancing earnings quality and profit generation capacity.

Tax Burden

Fluctuated initially with a decline in 2016, then increased and stabilized around 0.8 from 2018 forward.

Interest Burden

Maintained a steady range near 0.90-0.97, indicating stable interest expense management.

EBIT Margin

Experienced a sharp increase in 2017 followed by a consistent upward trend, reaching roughly 26% by mid-2021.

Net Profit Margin

Mirrored the EBIT margin pattern with an initial surge in 2017, a short-term decline, then a steady increase above 20% in recent periods.