Bristol-Myers Squibb Co. (NYSE:BMY)

The financial performance, as indicated by the provided metrics, demonstrates significant fluctuations over the observed period. Return on Assets (ROA) generally improved from March 2022 through September 2023, before experiencing a substantial decline through December 2024. Financial Leverage exhibited a more moderate pattern, initially decreasing then increasing, and subsequently declining again. Return on Equity (ROE) mirrored the ROA trend, with a strong upward trajectory followed by a dramatic downturn, and a recovery in the most recent periods.

Return on Assets (ROA)

ROA increased steadily from 6.07% in March 2022 to a peak of 9.08% in September 2023. This suggests improving efficiency in asset utilization. However, a sharp reversal began in the latter half of 2023, with ROA falling to -9.66% by December 2024. A partial recovery is then observed, reaching 7.83% by December 2025. The negative values in later periods indicate a loss in asset profitability.

Financial Leverage

Financial Leverage showed a slight decrease from 3.26 in March 2022 to 2.92 in June 2023. It then increased to 3.23 in December 2023, before declining to 4.87 in December 2025. The increase suggests a greater reliance on debt financing, while the subsequent decline indicates a reduction in that reliance. The values remain relatively stable, fluctuating within a range of approximately 2.9 to 6.0.

Return on Equity (ROE)

ROE experienced consistent growth from 19.79% in March 2022 to 28.57% in September 2023, benefiting from both increasing ROA and relatively stable financial leverage. The period from September 2023 to December 2024 witnessed a dramatic decline in ROE, reaching -54.78% in December 2024, largely driven by the negative ROA. A substantial recovery is then evident, with ROE reaching 38.19% by December 2025, indicating a significant turnaround in equity profitability. The magnitude of the negative ROE values is particularly noteworthy.

The correlation between ROA and ROE is strong, as expected. The significant decline in ROA during the latter part of the period had a disproportionately negative impact on ROE, amplified by the financial leverage. The recovery in ROE in the final periods is contingent on the recovery of ROA.

The three-component DuPont analysis reveals significant fluctuations in Return on Equity (ROE) over the observed period. These fluctuations are driven by changes in Net Profit Margin, Asset Turnover, and Financial Leverage. A period of relative stability from March 2022 to December 2022 is followed by substantial shifts, particularly in the latter half of the period examined.

Net Profit Margin

The Net Profit Margin demonstrated an increasing trend from March 2022 (13.31%) to September 2022 (14.29%), before stabilizing and slightly declining to 13.71% by December 2022. A marked improvement occurred in the first half of 2023, peaking at 17.62% in June 2023 and reaching 18.44% in September 2023. However, the margin experienced a dramatic reversal beginning in March 2024, falling into negative territory and reaching a low of -18.53% by December 2024. A recovery is observed in 2025, with the margin reaching 14.64% by December 2025, though remaining below the levels seen in 2022 and 2023.

Asset Turnover

Asset Turnover exhibited a modest, consistent increase from 0.46 in March 2022 to 0.52 in December 2024. This indicates a gradual improvement in the efficiency with which assets are used to generate sales. The ratio remained relatively stable at 0.50 to 0.52 through the first three quarters of 2025, before increasing to 0.54 in December 2025. This is the most stable of the three components.

Financial Leverage

Financial Leverage generally decreased from 3.26 in March 2022 to 2.92 in June 2023, suggesting a reduction in the reliance on debt financing. A subsequent increase was observed, peaking at 3.23 in December 2022 and 6.01 in March 2024, indicating a significant increase in the use of financial leverage. Leverage remained high through December 2024 (5.67) before declining to 4.87 by December 2025.

Return on Equity (ROE)

ROE mirrored the trends in the underlying components. It increased from 19.79% in March 2022 to a peak of 28.57% in September 2023. The substantial decline in Net Profit Margin in 2024, coupled with the increased Financial Leverage, resulted in a dramatic decrease in ROE, culminating in a negative value of -54.78% by December 2024. The partial recovery of the Net Profit Margin in 2025, alongside a decrease in Financial Leverage, led to a substantial, though incomplete, recovery in ROE, reaching 38.19% by December 2025. The volatility in ROE highlights the sensitivity of the metric to changes in profitability and financial structure.

The interplay between these three ratios demonstrates that while asset utilization improved consistently, the significant swings in profitability and financial leverage were the primary drivers of the observed ROE fluctuations. The negative ROE values in 2024 are particularly noteworthy and warrant further investigation into the factors contributing to the substantial decline in net profit margin.

The financial performance, as indicated by the two-component disaggregation of Return on Assets (ROA), exhibits notable fluctuations over the observed period. A general upward trend in both Net Profit Margin and Asset Turnover contributed to increasing ROA through much of 2022 and 2023, followed by a significant reversal in profitability in 2024 and a partial recovery in 2025.

Net Profit Margin

The Net Profit Margin demonstrated an increasing trend from 13.31% in March 2022 to a peak of 18.44% in September 2023. This indicates improving profitability from core operations. However, a substantial decline commenced in March 2024, reaching -18.53% by December 2024. This suggests a significant deterioration in profitability, potentially due to increased costs, decreased revenues, or one-time impairments. A recovery is observed in 2025, with the margin reaching 14.64% by December, though it remains below the highs seen in 2023.

Asset Turnover

Asset Turnover remained relatively stable between 0.46 and 0.49 from March 2022 through September 2023, indicating consistent efficiency in utilizing assets to generate sales. A slight increase is observed in 2024, peaking at 0.52 in December, suggesting improved asset utilization. This trend continues into 2025, reaching 0.54 in December, indicating further gains in efficiency. While positive, the impact of this improvement was largely offset by the declining Net Profit Margin in 2024.

Return on Assets (ROA)

ROA mirrored the trends in its component ratios. It increased from 6.07% in March 2022 to 9.08% in September 2023, driven by improvements in both profitability and asset utilization. The sharp decline in Net Profit Margin in 2024 resulted in a corresponding decrease in ROA, falling to -9.66% by December 2024. The partial recovery in Net Profit Margin during 2025 contributed to an increase in ROA, reaching 7.83% by December 2025, but it did not fully offset the earlier losses.

The significant negative shift in Net Profit Margin during 2024 appears to be the primary driver of the overall decline in ROA. While Asset Turnover showed consistent improvement, it was insufficient to counteract the impact of reduced profitability. The recovery observed in 2025 suggests potential corrective actions or favorable market conditions, but further monitoring is warranted to assess the sustainability of this trend.