Allergan Inc. (NYSE:AGN.)

The analysis of the quarterly financial metrics over the reviewed periods reveals several notable trends in profitability and capital structure as measured by Return on Assets (ROA), Financial Leverage, and Return on Equity (ROE).

Return on Assets (ROA)

Initial data points in early 2010 are missing; however, by the first quarter of 2011, ROA registers a very low value close to zero, followed by a slight negative performance mid-2011. A pronounced improvement occurs in the fourth quarter of 2011, where ROA elevates markedly above 10%. This high level is maintained consistently through to the end of 2014, fluctuating around the 9.3% to 12.3% range. The data illustrates a sharp transition from near-zero and negative profitability to a sustained period of strong asset efficiency.

Financial Leverage

Financial leverage ratios show moderate variability over the five-year span from 2010 to 2014. The ratio starts at approximately 1.5, peaks near 1.9 in the third quarter of 2010, and thereafter stabilizes around 1.6 to 1.7 in subsequent periods. This suggests a moderate and relatively stable use of debt relative to equity without significant leveraging up or down trends during the analyzed timeframe.

Return on Equity (ROE)

ROE follows a similar trend as ROA but with higher magnitudes, which is consistent given the impact of leverage on equity returns. Early 2011 figures show marginally positive to slightly negative returns, with a substantial increase observed starting in the fourth quarter of 2011 where ROE reaches nearly 18%. This elevated profitability on equity investment sustains with minor fluctuations around 15% to nearly 20% through 2014. The patterns suggest improved shareholder returns corresponding with earlier observed gains in asset profitability and moderated financial leverage.

In summary, the period following mid-2011 reflects a significant turnaround in both asset and equity returns after an initial phase of minimal or negative profitability. The consistency of financial leverage ratios indicates that these improved returns were achieved with stable capital structure policies rather than shifts in debt levels. Overall, the data depicts enhanced operational efficiency and profitable capital utilization beginning in late 2011 and persisting throughout the ensuing three years.

Net Profit Margin

The net profit margin exhibits a notable transition from negligible or negative values in early periods to consistently positive and significantly higher values starting in late 2010. Beginning with a margin close to zero or negative in the first half of 2011, there is a marked improvement by the end of 2011, stabilizing around 17% to 19%. Although some fluctuations are present, the margin remains generally strong through the following years, peaking at above 21% in the last quarter of 2014. This trend indicates an improved profitability position over the analyzed period.

Asset Turnover

The asset turnover ratio shows relative stability throughout the period, fluctuating modestly around the range of 0.57 to 0.65. The ratio peaked around the third quarter of 2010 at 0.65 but gradually trended downwards towards 0.57 by the final quarter of 2014. This suggests a slight decline in the efficiency with which the company uses its assets to generate revenue, although the changes are not pronounced.

Financial Leverage

Financial leverage ratios remain fairly stable with minor fluctuations around an average of approximately 1.6 to 1.7. Early in the timeline, the leverage ratio was as low as 1.53 but increased to nearly 1.92 by the third quarter of 2010. Following this peak, it generally declined and stabilized at values close to 1.6 from mid-2012 onwards. This indicates a relatively constant use of debt relative to equity during the latter periods with a reduction in leverage after the initial rise.

Return on Equity (ROE)

ROE trends align closely with net profit margin, showing initial negative or near-zero values in the first half of 2011, followed by a significant improvement to levels exceeding 15% starting in late 2011. ROE exhibited peaks around 19% to 19.5% in several quarters, with some decline observed in 2013 but recovery again in 2014. The values peaked at almost 20% by the end of 2014. This suggests increasing profitability and effective use of equity capital over time.

The financial data reveals several notable trends in key performance ratios over the observed periods.

Tax Burden

This ratio, which reflects the portion of pre-tax earnings retained after taxes, shows an initial instability with negative values around mid-2011 (-0.06 and -0.02), followed by a recovery to more stable and positive levels from late 2011 onward. From December 2011 to the end of 2014, the tax burden remained consistently around 0.68 to 0.77, indicating a steady tax efficiency in those periods.

Interest Burden

The interest burden starts at 0.68 in mid-2010 and shows a marginal decline early on before a marked improvement beginning in late 2010. From December 2010 forward, this ratio stabilizes at a high level, mostly around 0.95 to 0.97, suggesting that interest expenses relative to EBIT decreased, improving earnings before taxes.

EBIT Margin

There is a clear upward trend in the EBIT margin starting from approximately 5% in early 2010, surging dramatically in December 2010 to over 25%, and maintaining a high level between 23% and 28% subsequently. This suggests a significant enhancement in operating profitability and operational efficiency throughout the periods.

Asset Turnover

The asset turnover ratio remains relatively flat with minor fluctuations around 0.57 to 0.65 across all periods. This indicates stable efficiency in using assets to generate sales, with no substantial improvement or decline noted.

Financial Leverage

The financial leverage ratio fluctuates between 1.53 and 1.92 initially, peaking around the third quarter of 2010. Thereafter, it declines slightly and stabilizes around 1.6 to 1.7 through the end of 2014, suggesting moderate use of debt to finance assets without significant increase or reduction in leverage.

Return on Equity (ROE)

ROE displays a volatile pattern early on, with negative returns in mid-2011, but recovers strongly starting in late 2011. From that period forward, ROE consistently remains between approximately 15% and 20%, reflecting substantial profitability and value generation for shareholders, aligned with improvements seen in EBIT margin and interest burden.

Overall, the data demonstrates a period of initial instability in tax and interest burdens and returns, followed by consistent improvements in profitability (EBIT margin and ROE) and stable asset utilization and leverage. These trends suggest strengthened operational performance and financial management over time.

The analysis of the provided quarterly financial ratios reveals notable trends in profitability, asset utilization, and overall efficiency over the observed periods.

Net Profit Margin

The net profit margin showed initial volatility with near zero or negative values in early periods, indicating a challenging profitability environment. Starting from the quarter ending December 31, 2010, a marked improvement is evident, with margins rising sharply into double digits and maintaining a consistent range between approximately 15% and 21% through 2014. The highest recorded margin in the dataset appears in the quarter ending December 31, 2014, at about 21.39%, suggesting strengthening profitability over time.

Asset Turnover

The asset turnover ratio remained relatively stable throughout the periods, fluctuating narrowly between 0.57 and 0.65. This steadiness implies consistent efficiency in generating revenue from asset holdings. There is a slight downward trend towards the later periods, with the ratio decreasing from around 0.63 to 0.57, possibly indicating a minor decline in asset utilization rates.

Return on Assets (ROA)

ROA mirrored the trend seen in net profit margin, starting with negligible or negative returns and increasing significantly from the quarter ending December 31, 2010 onward. ROA figures stabilized in the low double digits, ranging mostly between 9% and 12%, signaling efficient asset use to generate profits. A peak ROA near 12.28% is observed at the end of the last recorded period.

In summary, the company’s profitability substantially improved starting late 2010, sustaining strong positive margins and effective use of assets to yield better returns. Asset turnover showed minor fluctuations but remained steady overall, suggesting relatively consistent operational efficiency.

Tax Burden

The tax burden shows notable variation, starting with negative values in mid-2011, indicating instances of tax credits or losses. From December 2011 onward, it stabilizes within the range of approximately 0.68 to 0.77, suggesting a consistent proportion of income retained after taxes in recent periods.

Interest Burden

The interest burden demonstrates improvement over time. Initial values around 0.63 to 0.68 in early 2011 increase to a steady range between 0.95 and 0.97 from late 2011 through 2014. This indicates reduced interest expenses relative to earnings before interest and taxes, reflecting improved financial leverage or lower debt servicing costs.

EBIT Margin

The EBIT margin experiences a significant increase from around 5% in mid-2010 to levels consistently above 23% starting in late 2010. This upward trend remains generally stable through 2014, fluctuating around 24% to 28%, indicative of improved operational profitability and efficient cost management.

Asset Turnover

Asset turnover shows a gradual declining trend over the period. Values decrease from approximately 0.65 in late 2010 to about 0.57 by the end of 2014. This suggests a slight decline in the efficiency with which assets are used to generate sales, potentially indicating increased asset base or slower sales growth relative to assets.

Return on Assets (ROA)

The return on assets mirrors fluctuations seen in earlier ratios. After negative returns in mid-2010, ROA substantially improves to double-digit levels by the end of 2010 and remains between roughly 9% and 12% thereafter. This reflects enhanced overall profitability and effective asset utilization consistent with strong operating performance and controlled interest and tax burdens.

The financial data reveals several key trends and changes over the periods analyzed.

Tax Burden

The tax burden ratio shows a marked improvement starting from very low or negative values in early 2011, moving from -0.06 and -0.02 to stable levels around 0.7 or above from late 2011 through the end of 2014. In the final quarter of 2014, the ratio increased further to 0.77, indicating a higher proportion of earnings retained after taxes in recent periods.

Interest Burden

The interest burden ratio initially fluctuated between 0.63 and 0.68 in early 2011, but it quickly stabilized at approximately 0.95 to 0.97 for the majority of the subsequent quarters. This suggests a consistently low interest expense relative to earnings before interest and taxes, reflecting potentially improved interest coverage or reduced interest costs over time.

EBIT Margin

The EBIT margin experienced a notable increase in 2010, jumping from around 5% in the first three quarters to 25.28% by year-end 2010. From 2011 onwards, EBIT margin maintained strong and stable levels, generally fluctuating within the mid to high 20 percent range. Slight decreases were observed during 2013 but recovered towards the end of 2014, reaching approximately 28.77% in the final quarter. This pattern indicates significantly improved operational profitability starting late 2010 and sustained through the subsequent years.

Net Profit Margin

The net profit margin displayed considerable volatility early in 2011, including slightly negative figures around mid-year. However, the margin sharply increased to over 17% by the end of 2010 and remained robust between approximately 15% and 21% throughout the following years. Despite minor declines in late 2012 and 2013, the margin surged to a peak of 21.39% by the last quarter of 2014, indicating enhanced net earnings relative to sales over time.

Overall, the data portrays a significant turnaround starting around the end of 2010, with marked improvements in both operational and net profitability margins as well as stabilization of tax and interest expenses. These trends suggest effective management of costs and taxes, contributing to stronger profitability and financial health from 2011 onward.