Eli Lilly & Co. (NYSE:LLY)

Return on Assets (ROA)

The ROA initially decreased from 13.28% in 2020 to 11.44% in 2021. It then increased moderately to 12.62% in 2022 before experiencing a significant decline to 8.19% in 2023. In 2024, the ROA rebounded sharply to 13.45%, reaching the highest level in the observed period. This pattern reflects some volatility with a notable dip in 2023 followed by recovery.

Financial Leverage

The financial leverage ratio showed a continuous decline from 8.27 in 2020 to a low of 4.65 in 2022, indicating a reduction in the use of debt or obligation financing relative to equity. In 2023, the leverage ratio increased to 5.94 and slightly decreased to 5.55 in 2024, suggesting a moderate uptick in leverage after the initial reduction phase.

Return on Equity (ROE)

The ROE exhibited a steady downward trend from a very high 109.79% in 2020 to 62.16% in 2021 and further declining to 58.64% in 2022. It continued to decrease to 48.65% in 2023, reflecting diminishing efficiency in generating returns from shareholders' equity. However, in 2024 there was a significant recovery to 74.62%, indicating improved profitability relative to equity in the most recent year.

Overall Observations

The financial data reveal a period of volatility and adjustment. Both ROA and ROE experienced initial declines, with ROA sharply dropping in 2023 before recovering. ROE shows a similar trend but without fully returning to the initial peak by 2024. Financial leverage trended downward through 2022, indicating deleveraging, followed by a moderate increase in subsequent years. The interplay suggests that the company managed to restore asset profitability and equity returns in 2024, possibly supported by an adjusted leverage position.

Net Profit Margin

The net profit margin exhibited variability over the five-year period. Starting at 25.24% in 2020, it decreased significantly to 19.71% in 2021, followed by a moderate increase to 21.88% in 2022. A notable decline occurred in 2023, dropping to 15.36%, the lowest point in the timeframe. In 2024, a recovery was observed with the margin rising to 23.51%, indicating improved profitability relative to revenue compared to the previous year.

Asset Turnover

The asset turnover ratio showed relative stability across the analyzed years. It increased slightly from 0.53 in 2020 to 0.58 in 2021, maintaining that level in 2022. However, a decline back to 0.53 occurred in 2023, followed by a modest rebound to 0.57 in 2024. This pattern suggests consistent but somewhat fluctuating efficiency in utilizing assets to generate sales.

Financial Leverage

Financial leverage demonstrated a downward trend from 2020 through 2022, decreasing substantially from 8.27 to 4.65. In 2023, the ratio increased sharply to 5.94, before slightly declining to 5.55 in 2024. This indicates a significant reduction in reliance on debt or other liabilities initially, followed by a partial increase in leverage in the latter years, suggesting adjustments in capital structure or financing strategy.

Return on Equity (ROE)

The return on equity followed a declining trajectory from an exceptionally high 109.79% in 2020 to 48.65% in 2023. After a steep drop in 2021 to 62.16% and continued decreases each year, the ROE rebounded to 74.62% in 2024. The fluctuations mirror the changes in net profit margin and financial leverage, indicating that the variation in profitability and changes in leverage have significantly influenced shareholders' returns over the period.

Overall Observations

Overall, the data reflect volatility in profitability metrics and leverage levels, with a general trend of decreasing profitability and efficiency from 2020 through 2023 followed by improvements in 2024. The recovery in net profit margin and ROE in the latest year, alongside stabilized asset turnover and moderate financial leverage, points to a potential stabilization or strategic shift aimed at enhancing financial performance and shareholder value.

Tax Burden

The tax burden ratio exhibits a general increase from 0.86 in 2020 to 0.92 in 2022, indicating a decreasing effective tax rate during this period. However, it declines sharply to 0.80 in 2023 before partially rebounding to 0.84 in 2024. This fluctuation suggests variability in tax expenses relative to pre-tax earnings across the years.

Interest Burden

The interest burden remains relatively stable throughout the timeline, fluctuating narrowly between 0.93 and 0.95. This stability implies consistent interest expenses relative to earnings before interest and taxes over the observed periods.

EBIT Margin

The EBIT margin shows notable volatility. It declines significantly from 30.93% in 2020 to 22.94% in 2021, followed by a moderate recovery to 25.01% in 2022. Another decline occurs in 2023 to 20.63%, before a strong rebound to 29.88% in 2024. These fluctuations suggest changes in operating efficiency and cost management impacting earnings before interest and taxes.

Asset Turnover

Asset turnover remains fairly consistent, increasing slightly from 0.53 in 2020 to 0.58 in 2021 and holding steady at 0.58 in 2022. It dips back to 0.53 in 2023, then rises again to 0.57 in 2024, indicating relatively stable efficiency in utilizing assets to generate sales throughout the period.

Financial Leverage

Financial leverage decreases considerably from a high of 8.27 in 2020 to 4.65 in 2022, suggesting a reduction in debt relative to equity or a change in capital structure to lower risk. It then increases moderately to 5.94 in 2023 before declining slightly to 5.55 in 2024, indicating some variability but generally lower leverage compared to 2020.

Return on Equity (ROE)

ROE experiences a pronounced downward trend from 109.79% in 2020 to 48.65% in 2023, demonstrating a significant decrease in profitability relative to shareholders’ equity. However, there is a notable recovery in 2024 to 74.62%, reflecting improved overall return. Despite the recovery, ROE remains well below the peak in 2020, indicating ongoing challenges in maintaining high equity returns.

Net Profit Margin

The net profit margin exhibits fluctuations over the five-year period. Beginning at 25.24% in 2020, it experiences a decline to 19.71% in 2021. Some recovery is observed in 2022, with the margin rising to 21.88%. A significant decrease follows in 2023, reaching the lowest point at 15.36%. In 2024, the margin improves markedly to 23.51%, approaching the initial value recorded in 2020. This pattern indicates variability in profitability management or cost structure impacts across the period.

Asset Turnover

The asset turnover ratio remains relatively stable throughout the observed years. Starting from 0.53 in 2020, it increases slightly to 0.58 in 2021 and maintains this level in 2022. In 2023, a minor decline to 0.53 is noted, followed by a modest increase to 0.57 in 2024. The consistency in asset turnover implies steady efficiency in utilizing assets to generate sales, with only marginal variation between years.

Return on Assets (ROA)

The return on assets demonstrates a downward trend initially, starting at 13.28% in 2020 and decreasing to 11.44% in 2021. A slight improvement occurs in 2022 with ROA rising to 12.62%. However, 2023 sees a sharp decline to 8.19%, the lowest point in the dataset. The ratio rebounds in 2024, increasing to 13.45%, which exceeds the initial level in 2020. This volatility reflects changes in both profitability and asset management effectiveness over the period.

The financial data reveals several key trends over the five-year period ending December 31, 2024. The tax burden ratio experienced some fluctuations, starting at 0.86 in 2020 and peaking at 0.92 in 2022 before declining to 0.80 in 2023 and rising slightly again to 0.84 in 2024. This indicates variability in the proportion of earnings paid as tax, which may reflect changes in tax policies or earnings composition.

The interest burden ratio remained relatively stable throughout the period, consistently hovering around 0.93 to 0.95. This stability suggests a consistent level of interest expense relative to earnings before interest and taxes, signaling controlled financial leverage costs.

EBIT margin percentages showed notable volatility. Starting at 30.93% in 2020, it decreased substantially to 22.94% in 2021, followed by a slight recovery to 25.01% in 2022. A further decline occurred in 2023 to 20.63%, but a significant rebound brought it back to 29.88% in 2024. These changes indicate fluctuations in operating profitability that may be influenced by cost structures, pricing strategies, or operational efficiency.

Asset turnover ratios modestly increased from 0.53 in 2020 to 0.58 in 2021 and remained steady at that level in 2022. In 2023, it dropped back to 0.53 before rising again to 0.57 in 2024. These values suggest a relatively stable but only moderate efficiency in using assets to generate revenues, with minor improvements in asset utilization towards the end of the period.

Return on assets (ROA) exhibited a downward trend initially, declining from 13.28% in 2020 to 11.44% in 2021, before a partial recovery to 12.62% in 2022. A significant drop to 8.19% was observed in 2023, followed by a strong recovery to 13.45% in 2024. This pattern reflects variations in overall profitability relative to asset base, influenced by operating margin and asset turnover trends combined with tax and interest burdens.

Tax Burden

Fluctuated with a peak in 2022 and a dip in 2023, indicating variable tax impact on earnings.

Interest Burden

Remained stable around 0.93 to 0.95, illustrating consistent interest expense management.

EBIT Margin

Experienced significant volatility, with a strong rebound in 2024 after a multi-year decline.

Asset Turnover

Showed mild variations but overall moderate consistency in asset utilization.

Return on Assets (ROA)

Mirrored the trends of operating margin and asset turnover with notable recovery in 2024 after a dip in 2023.

Tax Burden

The tax burden ratio shows a generally stable pattern with minor fluctuations over the five-year period. It increased from 0.86 in 2020 to a peak of 0.92 in 2022, followed by a decline to 0.80 in 2023, and then a slight recovery to 0.84 in 2024. This indicates variability in the company's effective tax rate, with some relief after 2022.

Interest Burden

The interest burden ratio remained relatively constant throughout the years, with minimal variation from 0.95 in 2020 through 2024, showing a slight dip to 0.93 in 2023 before rising again to 0.94 in 2024. This steady pattern suggests consistent management of interest expenses relative to earnings.

EBIT Margin

The EBIT margin exhibited notable volatility. It started at a high of 30.93% in 2020 but declined sharply to 22.94% in 2021. After a moderate recovery to 25.01% in 2022, it again dropped significantly to 20.63% in 2023. However, 2024 showed a strong rebound to 29.88%, nearly reaching the initial 2020 level. These fluctuations point toward variable operating performance, influenced by factors such as cost management and revenue changes.

Net Profit Margin

The net profit margin followed a declining trend from 25.24% in 2020 to a low of 15.36% in 2023, with intermittent increases in 2022 (21.88%) and 2024 (23.51%). This overall decrease suggests pressures on profitability, potentially from higher expenses or decreased revenue efficiency, although the 2024 uptick indicates partial recovery.