Eli Lilly & Co. (NYSE:LLY)

Finished Products

The value of finished products inventory demonstrated a fluctuating but overall upward trend. From 2020 to 2021, the inventory level remained relatively stable with a slight increase. In 2022, there was a significant rise, reaching over 900 million USD, followed by a decrease in 2023. The year 2024 showed a notable increase, peaking at approximately 1.22 billion USD, indicating potential growth in finished goods availability or production output.

Work in Process

Work in process inventory showed a steady and pronounced increase over the five-year period. Starting at around 2.54 billion USD in 2020, the value slightly declined in 2021, but subsequently rose consistently through 2022, 2023, and 2024, reaching nearly 4 billion USD. This trend suggests expanding production activities or extended production cycles, possibly reflecting strategic scaling or increased demand.

Raw Materials and Supplies

This inventory category experienced substantial growth, particularly after 2021. From about 651 million USD in 2020, the inventory increased moderately in 2021 and 2022, with a sharper rise thereafter, more than doubling between 2022 and 2024, reaching over 2.3 billion USD. The sharp increase in raw materials suggests proactive stockpiling or supply chain adjustments to meet anticipated production requirements.

Inventories, Approximate Replacement Cost

The replacement cost of inventories showed an overall upward trajectory, with relatively steady levels between 2020 and 2022, followed by marked increases in 2023 and 2024. The rise from approximately 4.3 billion USD in 2022 to 7.53 billion USD in 2024 indicates inflationary pressures or increased acquisition costs, which could impact future profitability or cost management efforts.

Increase (Reduction) to LIFO Cost

The adjustments to LIFO cost fluctuated over the period, with moderate positive amounts in the early years. Notably, there was a significant jump in 2023 to over 102 million USD, followed by a reduction to around 63 million USD in 2024. These fluctuations may reflect changes in inventory cost layers and potential volatility in input prices influencing reported inventory valuation under LIFO accounting.

Total Inventories

Total inventories reflected the cumulative impact of the components above, showing a decreasing trend from 2020 to 2021, followed by steady and sharp increases through 2022 to 2024. The total inventory grew from nearly 4 billion USD in 2020 to approximately 7.59 billion USD in 2024. This steady increase suggests a considerable buildup of stock, which may point to expectations of increased sales volume or a response to supply chain uncertainties.

The financial data reveals several notable trends over the five-year period ending December 31, 2024.

Inventories

Both reported and adjusted inventories show an overall increasing trend, with reported inventories rising from approximately 3.98 billion USD in 2020 to about 7.59 billion USD in 2024. Adjusted inventories follow a similar pattern, slightly lower than reported values due to LIFO reserve adjustments. The most substantial growth occurs between 2022 and 2024, indicating accelerated inventory accumulation in recent years.

Current Assets

Reported current assets increased from roughly 17.46 billion USD in 2020 to more than 32.74 billion USD in 2024. Adjusted current assets are marginally lower but mirror the same upward trend, reflecting growth in liquid assets and assets expected to be converted to cash within a year. The largest growth spike appears between 2022 and 2023, suggesting significant expansion of short-term asset holdings.

Total Assets

Reported total assets have also grown steadily over the period, increasing from about 46.63 billion USD to nearly 78.71 billion USD by the end of 2024. Adjusted total assets, which account for inventory valuation adjustments, maintain essentially the same pattern with minimal variance. The acceleration of asset growth is particularly pronounced starting from 2022, reflecting substantial investments or acquisitions, or organic growth in asset base.

Shareholders’ Equity

Reported shareholders’ equity has more than doubled, moving from approximately 5.64 billion USD in 2020 to nearly 14.19 billion USD in 2024. Adjusted equity values closely align with reported figures. The sharp increase is especially visible between 2023 and 2024, indicating significant retention of earnings, equity financing activities, or revaluation effects contributing to stronger capital base.

Net Income

Net income reports a somewhat volatile pattern but with overall growth by the end of the period. Starting at approximately 6.19 billion USD in 2020, it dips in 2021 and 2023, but rebounds sharply to 10.59 billion USD in 2024. Adjusted net income closely parallels reported results, with minor adjustments. The significant jump in 2024 suggests improved operational performance, higher revenues, or cost efficiencies yielding better profitability.

Overall, the company demonstrates a strong growth trajectory across key financial metrics, with consistent asset and equity accumulation, supported by rising net income in the most recent year. Inventory levels have expanded significantly, possibly indicating strategic stockpiling or product line expansion, while the adjustments for LIFO reserves have a relatively small but consistent impact on reported values.

Current Ratio

The current ratio exhibits a declining trend from 1.4 in 2020 to 0.94 in 2023, indicating a reduction in short-term liquidity over these years. However, there is a subsequent rebound to 1.15 in 2024, suggesting an improvement in the company’s ability to cover short-term liabilities with current assets. The adjusted ratio closely follows the reported values, showing minimal differences between reported and LIFO reserve adjusted figures.

Net Profit Margin

The net profit margin shows considerable fluctuation across the periods. Starting at around 25.3% in 2020, it declines sharply to approximately 15% in 2023, indicating decreased profitability during this period. The margin recovers significantly in 2024 to above 23%, approaching initial levels. The adjusted net profit margin values are consistently slightly higher but align closely with the reported figures.

Total Asset Turnover

Total asset turnover remains relatively stable, with minor variations between 0.53 and 0.58 across all years. The turnover peaked in 2021 and 2022 at 0.58 and dipped to 0.53 in 2023 before a slight recovery in 2024. The adjusted data parallels the reported data exactly, indicating minimal impact from inventory adjustments on asset utilization efficiency.

Financial Leverage

Financial leverage displays a significant decrease from a very high level of above 8 in 2020 down to approximately 4.65 in 2022, suggesting a reduction in the use of debt relative to equity in the capital structure during this period. However, leverage rises again in 2023 and 2024 to levels around 5.5 to 6, indicating increased debt usage. Adjusted figures are marginally higher but follow the same trend.

Return on Equity (ROE)

ROE declines substantially from an extremely high level exceeding 100% in 2020 to below 50% by 2023, highlighting a significant reduction in shareholder profitability and efficiency in using equity. In 2024, ROE rises again to approximately 75%, showing partial recovery. Adjusted ROE values mirror the reported ones closely with slight increases after adjustments.

Return on Assets (ROA)

ROA follows a general downward trend from about 13.3% in 2020 to just above 8% in 2023, signaling decreased effectiveness in asset utilization for generating profits. The measure rebounds in 2024 to above 13%, similar to the 2020 level. Adjusted ROA values are slightly higher than reported values but show the same trend.

Reported Current Assets

The reported current assets exhibit an overall increasing trend from 17,462,100 thousand US$ in 2020 to 32,739,700 thousand US$ in 2024. After a slight decrease between 2021 (18,452,400) and 2022 (18,034,500), the value significantly increases in the subsequent years, peaking notably in 2023 and 2024.

Adjusted Current Assets

Adjusted current assets closely follow the pattern of reported current assets, starting at 17,427,300 thousand US$ in 2020 and rising to 32,676,800 thousand US$ in 2024. The differences between reported and adjusted values remain minimal throughout the period, indicating consistent adjustment impacts.

Reported Current Ratio

The reported current ratio shows a declining trend from 1.40 in 2020 to a low of 0.94 in 2023, indicating a reduction in short-term liquidity over this period. However, in 2024, the ratio improves to 1.15, suggesting a partial recovery in liquidity position.

Adjusted Current Ratio

Adjusted current ratios mirror the reported ratios closely, declining from 1.40 in 2020 to 0.94 in 2023, and then rising to 1.15 in 2024. This parallel trend confirms that adjustments have minimal effect on the liquidity ratio.

Summary of Trends and Insights

Both reported and adjusted current assets demonstrate strong growth, especially from 2022 onwards, which may indicate improved asset management or operational expansion. Despite the growth in current assets, the current ratio declines until 2023, suggesting that current liabilities might have increased at a faster pace than current assets during that time frame. The subsequent increase in the current ratio in 2024 signals an improvement in the company’s ability to meet short-term obligations. The negligible difference between reported and adjusted financial metrics implies that the LIFO reserve adjustments have limited impact on the liquidity evaluation.

The financial data reveals several notable trends over the five-year period from 2020 to 2024. Both reported and adjusted net income exhibit fluctuations with a general pattern of decline from 2020 through 2023, followed by a substantial increase in 2024.

Net Income Trends

Reported net income decreased from approximately 6.19 billion US dollars in 2020 to a low of around 5.24 billion US dollars in 2023. The adjusted net income mirrors this trend closely, declining from 6.21 billion US dollars in 2020 to about 5.15 billion US dollars in 2023. However, both measures demonstrate a significant recovery in 2024, reaching approximately 10.59 billion (reported) and 10.63 billion (adjusted) US dollars, representing nearly a doubling from the prior year.

Net Profit Margin Dynamics

Net profit margins, both reported and adjusted, reflect a similar pattern of contraction followed by recovery. The reported net profit margin decreased from 25.24% in 2020 to a low of 15.36% in 2023 before rebounding to 23.51% in 2024. The adjusted net profit margin follows a parallel trajectory, declining from 25.31% in 2020 to 15.08% in 2023 and then rising to 23.60% in 2024. The margins for adjusted figures consistently remain slightly higher than the reported values over the periods analyzed, but differences are marginal.

Comparative Observations Between Reported and Adjusted Figures

Adjusted net income and net profit margin figures are slightly higher or equal to their reported counterparts, indicating adjustments likely related to inventory accounting under the LIFO reserve. These adjustments did not fundamentally alter the overall trend but contributed to marginal improvements in reported profitability measures.

Overall Insight

The data indicates a period of declining profitability and income from 2020 through 2023, potentially due to operational, market, or cost-related challenges. The sharp increase in both income and profit margin in 2024 suggests a significant positive change, which could be attributed to improved operational efficiency, favorable market conditions, or other strategic initiatives. The close alignment of reported and adjusted figures supports the conclusion that inventory accounting adjustments have minimal impact on the core profitability trends.

Total Assets

The reported total assets demonstrate a consistent upward trajectory over the five-year period, increasing from approximately 46.63 billion US dollars at the end of 2020 to around 78.71 billion US dollars by the end of 2024. This represents a growth of nearly 69% over the period. Similarly, the adjusted total assets, which account for inventory LIFO reserve adjustments, follow the same increasing trend, reflecting values slightly lower but closely aligned with reported totals.

Total Asset Turnover

The reported total asset turnover ratio exhibits moderate fluctuations during the period. Beginning at 0.53 in 2020, it rises to 0.58 in 2021 and remains stable at 0.58 through 2022. However, it declines back to 0.53 in 2023 before increasing again to 0.57 in 2024. The adjusted total asset turnover ratio mirrors this pattern precisely, indicating that the inventory adjustments have a negligible effect on this metric.

Insights and Trends

The consistent increase in total assets suggests ongoing investment or asset accumulation, which may be associated with business expansion or capital expenditure. Despite the asset base growth, the total asset turnover ratio remains relatively stable around the mid-0.5 range, suggesting that asset utilization efficiency has neither improved significantly nor deteriorated markedly over this timeframe. The slight dip in turnover in 2023 followed by a partial recovery in 2024 could indicate fluctuations in sales or asset use efficiency within those specific years.

The close alignment between reported and adjusted figures for both total assets and asset turnover ratios implies that inventory LIFO reserve adjustments have limited impact on the overall asset base valuation and operational efficiency metrics.

Total Assets

The total assets exhibited an overall increasing trend throughout the periods analyzed. Reported total assets rose steadily from approximately 46.6 billion US dollars at the end of 2020 to nearly 78.7 billion US dollars by the end of 2024. The adjusted total assets, which consider inventory LIFO reserve adjustments, closely mirrored this pattern with only marginal differences, suggesting limited impact from inventory valuation adjustments on the total asset base.

Shareholders’ Equity

The reported shareholders’ equity showed significant growth, increasing from about 5.6 billion US dollars in 2020 to roughly 14.2 billion US dollars by 2024. Adjusted equity values followed a similar trajectory with very slight differences, indicating consistency between reported and adjusted measures. Notably, the equity increase was particularly marked between 2020 and 2021, and maintained steady upward movement thereafter.

Financial Leverage

The financial leverage ratio, representing the ratio of total assets to shareholders’ equity, declined substantially from 8.27 to 4.65 between 2020 and 2022, reflecting improved capitalization or reduced reliance on debt relative to equity during this period. However, from 2022 onward, the leverage ratio increased again to 5.94 in 2023 and slightly decreased to 5.55 in 2024. The adjusted financial leverage mirrored this same pattern with negligible deviations, confirming the stability of leverage measures regardless of inventory adjustments.

Overall Insights

Over the analyzed five-year horizon, the company demonstrated strong asset growth and substantial enhancement in equity, reducing financial leverage initially before a moderate increase in recent years. The alignment between reported and adjusted figures throughout the metrics indicates that inventory LIFO reserve adjustments have a minimal effect on the overall financial position indicators. This stability suggests that inventory valuation methods do not materially distort the perception of the company’s financial structure in these years.

The data reflects financial performance and equity position over a five-year period, highlighting both reported and adjusted figures with inventory LIFO reserve adjustments.

Net Income

Reported net income exhibits fluctuations, beginning at approximately 6.19 billion USD in 2020, declining to about 5.58 billion in 2021, then increasing to 6.24 billion in 2022, followed by a decrease to 5.24 billion in 2023, and subsequently a significant rise to 10.59 billion in 2024. Adjusted net income follows a similar trend but slightly diverges in 2023 and 2024, where it is marginally lower than reported in 2023 and somewhat higher in 2024, reaching approximately 10.63 billion USD.

Shareholders' Equity

Both reported and adjusted total shareholders' equity display a consistent upward trend throughout the timeframe. Starting at roughly 5.64 billion USD (reported) and 5.61 billion (adjusted) in 2020, equity increases notably to around 14.19 billion (reported) and 14.13 billion (adjusted) by 2024. The gap between reported and adjusted equity remains relatively narrow but slightly widens in later years.

Return on Equity (ROE)

Reported ROE demonstrates a declining trend from a peak of approximately 109.79% in 2020 down to 48.65% in 2023, before increasing to 74.62% in 2024. Adjusted ROE mirrors this pattern closely, with values marginally higher in most years except 2023, where it is slightly lower (48.24%). The decrease from 2020 through 2023 indicates diminishing profitability relative to equity, while the upturn in 2024 suggests improved efficiency or profitability.

General Insights

The data indicates volatility in profitability as measured by net income and ROE, with a noticeable recovery in 2024 after declines in prior years. The steadily increasing shareholders' equity suggests ongoing capital growth or retained earnings accumulation. The close alignment between reported and adjusted figures throughout the period implies limited impact from LIFO reserve adjustments on the overall financial assessment.

Net Income Trends

Reported net income demonstrated a fluctuating pattern over the five-year period, declining from approximately 6.19 billion in 2020 to 5.58 billion in 2021, followed by a recovery to around 6.24 billion in 2022. A subsequent decline to 5.24 billion was observed in 2023, before a substantial increase to 10.59 billion in 2024. The adjusted net income mirrored these movements closely, with only minor deviations, indicating consistency in adjustments related to the inventory LIFO reserve.

Total Assets Development

Reported total assets exhibited a steadily increasing trajectory, rising from about 46.63 billion in 2020 to 78.71 billion in 2024. A significant growth spurt is evident between 2022 and 2024. Adjusted total assets showed a nearly identical pattern, with negligible differences suggesting that the LIFO reserve adjustments had minimal impact on total asset figures.

Return on Assets (ROA) Behavior

Reported return on assets initially decreased from 13.28% in 2020 to 11.44% in 2021, followed by a recovery to 12.62% in 2022. It then declined sharply to 8.19% in 2023 before rebounding to 13.45% in 2024. The adjusted ROA follows a similar trend, with marginally lower figures in 2023 and slightly higher in 2024 compared to the reported ROA. This indicates that adjustments for the inventory LIFO reserve slightly influence the ROA calculation but do not materially alter the overall trend.

Insights and Observations

The financial data indicates notable volatility in net income and profitability, with a pronounced recovery in 2024 after a dip in 2023. Asset growth is robust, particularly from 2022 onward, suggesting significant investment or acquisition activity. The close alignment between reported and adjusted figures reflects minimal impact from inventory LIFO reserve adjustments on overall financial performance measures. The sharp ROA decrease in 2023 corresponds with the dip in net income, despite continued asset growth, indicating potential operational challenges or extraordinary items affecting profitability that year.