Edwards Lifesciences Corp. (NYSE:EW)

Return on Assets (ROA)

The ROA demonstrates an overall upward trend from 10.25% in March 2018, peaking at 18.23% in June 2020. Following this peak, there is a notable decline to 11.58% by September 2020, remaining relatively stable around 11.5% to 11.8% through December 2020 to March 2021. A significant increase is observed again from March 2021, reaching 19.09% in September 2021 before a slight decrease to 17.68% by December 2021.

Financial Leverage

This ratio has shown a gradual decline over the observed periods. It started at 1.74 in March 2017 and fluctuated slightly, reaching a higher level of 1.93 by December 2017. From early 2018 onwards, the ratio steadily decreases, dropping below 1.5 by December 2021, indicating a possible reduction in reliance on debt financing over time.

Return on Equity (ROE)

ROE follows a trend similar to ROA but with higher percentage values. It begins at 19.74% in March 2018 and increases to a peak of 28.4% in June 2020. The ratio then declines sharply to 19.37% by September 2020, remaining relatively steady until March 2021. Subsequently, a sharp rise is recorded again, reaching 28.49% in September 2021, followed by a slight reduction to 25.76% at the end of the year.

The analysis of the quarterly financial ratios reveals several important trends over the observed periods.

Net Profit Margin

Beginning from the first quarter of 2018, the net profit margin ranged roughly between 16% and 20% for most of the periods. There was a notable increase in the first quarter of 2020 to above 24%, although this was followed by a decline to around 17-19% for most of 2020 and early 2021. Subsequently, a strong upward trend is observed in 2021, with net profit margin peaking close to 30% by the last quarter, indicating a significant improvement in profitability efficiency during this period.

Asset Turnover

The asset turnover ratio shows relative stability with minor fluctuations over time. Initial values around 0.60-0.62 slightly increased to 0.70-0.71 between 2019 and early 2020. Post first quarter of 2020, the ratio declined to a range between 0.61 and 0.64, maintaining this level through late 2021. This suggests a modest decrease in asset utilization efficiency after early 2020 but generally stable operation.

Financial Leverage

Financial leverage exhibited a declining trend over the entire period. Starting from about 1.74-1.75 in early 2017, the ratio dropped steadily to approximately 1.46 by the end of 2021. This decline implies a conservative shift in the capital structure, reflecting reduced dependency on debt financing relative to equity.

Return on Equity (ROE)

The ROE values initially oscillated near the 20% mark from early 2018 through 2019, followed by a peak exceeding 28% in the first half of 2020. This was succeeded by a decrease to approximately 18% through most of 2020 and the first half of 2021. Similar to the net profit margin, ROE rebounded strongly in the latter half of 2021, nearing 29% at the end of the year. This pattern illustrates a recovery and improved effectiveness in generating equity returns after a mid-period dip.

In summary, profitability indicators such as net profit margin and ROE demonstrate a significant recovery and improvement by late 2021, despite some volatility around 2020. Asset turnover remains fairly consistent, suggesting stable operational efficiency, while financial leverage steadily decreases, indicating a trending move toward lower financial risk through reduced leverage.

Net Profit Margin

The net profit margin values begin from March 31, 2017, showing an initial figure of 16.99% and exhibiting a generally upward trajectory until December 31, 2018, peaking at 19.61%. During 2019, the margin fluctuated moderately, remaining around 18-20%, with a notable increase to 24.08% by March 31, 2020. This elevated margin was sustained through 2020, although a dip occurred in September 2020 to 17.21%. Subsequently, the metric rebounded and continued an upward pattern, reaching a significant high of 29.69% by March 31, 2021, and maintaining above 28% through December 31, 2021. Overall, the net profit margin demonstrates improved profitability over the analyzed periods, with a clear upward shift from mid-2019 onward and particularly strong margins observed in 2021.

Asset Turnover

Asset turnover ratios are available from March 31, 2017, starting at 0.60. The ratio shows slight fluctuations but remains within a fairly narrow range between 0.59 and 0.74 over the entire period, peaking at 0.74 in June 30, 2020. After that peak, the ratio gradually declined to around 0.62 from March 31, 2021, through December 31, 2021. This indicates a relatively stable efficiency in using assets to generate sales, with some modest variability but no significant long-term upward or downward trend.

Return on Assets (ROA)

Return on assets data begins at 10.25% on March 31, 2017, showing an overall increasing trend until December 31, 2019, where it reached 16.14%. The ROA continues rising sharply to 18.23% by June 30, 2020, then experiences a decline to approximately 11.38% - 11.80% through December 31, 2020. Starting in 2021, ROA improves again significantly, peaking at 19.09% on March 31, 2021, and maintaining a range around 17.68% to 19.09% through the end of the year. The pattern reflects an improvement in asset utilization profitability with fluctuations coinciding with the impact period of 2020, followed by a rebound in the subsequent year.

Overall Insights

The combined analysis of profitability and efficiency ratios shows that the company has generally enhanced its profitability over the analyzed period, as evidenced by the rising net profit margin and ROA, especially after mid-2019. Despite a temporary reduction in ROA and net margin during certain quarters of 2020, likely related to external challenges, both metrics recovered strongly in 2021. Asset turnover remained relatively stable, indicating consistent asset utilization without major shifts in operational efficiency. The strong improvement in profitability measures during 2021 suggests effective management actions and/or favorable market conditions leading to increased returns from assets and higher profit margins.