GE Aerospace (NYSE:GE)

Return on Assets (ROA)

The return on assets exhibited significant fluctuation over the five-year period. Initially, the ROA was positive at 2.25% in 2020 but declined sharply to a negative value of -3.28% in 2021. This was followed by a recovery in 2022 with a marginal positive return of 0.12%. From 2022 onwards, the ROA demonstrated a strong upward trend, reaching 5.81% in 2023 and slightly declining but remaining robust at 5.32% in 2024. Overall, this indicates an improvement in asset efficiency and profitability after a period of underperformance.

Financial Leverage

Financial leverage decreased considerably from a high ratio of 7.13 in 2020 to 4.93 in 2021, suggesting a reduction in reliance on debt or increased equity. However, from 2021 to 2024, the leverage ratio gradually increased again, rising to 5.16 in 2022, 5.96 in 2023, and 6.37 in 2024. This pattern points to a strategic shift towards higher leverage after an initial deleveraging phase, potentially to finance growth or operational needs.

Return on Equity (ROE)

The ROE mirrored the volatility observed in ROA across the period. It started at 16.04% in 2020, then dropped drastically to -16.17% in 2021, reflecting a significant loss or reduced profitability attributable to shareholders. A recovery phase followed with ROE approaching neutrality at 0.62% in 2022. Subsequently, there was a marked improvement to 34.63% in 2023, sustained slightly lower at 33.9% in 2024. This trajectory highlights enhanced returns to equity holders, correlating with improved operational performance and possibly the effects of increased financial leverage.

Overall Insights

The period under review shows an initial downturn in financial performance in 2021, with both returns and profitability metrics declining sharply. Following this, there are clear signs of recovery and growth. The increased financial leverage after 2021 coincides with improving returns on both assets and equity, suggesting effective use of borrowed funds to generate higher profits. Despite the fluctuations, by 2023 and 2024, the company achieves significantly stronger profitability metrics compared to the start of the period. This suggests improved operational efficiency and potentially successful strategic or financial restructuring efforts that enhanced shareholder value.

Net Profit Margin

The net profit margin displayed notable fluctuations over the period. Starting from a positive 7.81% in 2020, it sharply declined to a negative margin of -9.17% in 2021, indicating a loss during that year. Subsequently, the margin improved significantly, reaching 0.31% in 2022, and saw robust growth in 2023 and 2024 with values of 14.68% and 18.67%, respectively. This trend reflects a recovery and strengthening in profitability after the downturn in 2021.

Asset Turnover

The asset turnover ratio showed a generally increasing trend from 0.29 in 2020 to a peak of 0.40 in 2023, suggesting improved efficiency in using assets to generate sales. However, in 2024, this ratio declined back to 0.29, indicating a potential decrease in asset utilization efficiency during the latest period.

Financial Leverage

Financial leverage decreased from a high of 7.13 in 2020 to 4.93 in 2021, suggesting a reduction in reliance on debt or other liabilities at that time. From 2021 onwards, leverage gradually increased to 5.16 in 2022, 5.96 in 2023, and 6.37 in 2024. This upward trend indicates a steady increase in the company's use of financial leverage after the initial de-leveraging phase.

Return on Equity (ROE)

ROE followed a pattern similar to net profit margin, with positive returns in 2020 at 16.04%, a significant drop to negative -16.17% in 2021, and a rebound to marginally positive 0.62% in 2022. The ROE rose considerably in subsequent years, reaching 34.63% in 2023 and slightly decreasing to 33.9% in 2024. This demonstrates a strong recovery in shareholder returns following the adverse results in 2021.

Tax Burden

The tax burden ratio exhibits volatility over the analyzed periods. It decreased significantly from 1.09 in 2020 to 0.32 in 2022, before rising again to 0.89 in 2023 and maintaining a similar level at 0.87 in 2024. This pattern suggests fluctuations in tax efficiency or tax-related impacts on profitability.

Interest Burden

The interest burden ratio showed a declining trend from 0.62 in 2020 to a low of 0.3 in 2022, indicating reduced interest expenses relative to earnings before interest and taxes during this period. However, it increased sharply to 0.9 in 2023 and remained slightly lower but close to that level at 0.88 in 2024, reflecting a potential increase in interest expenses or borrowing costs in more recent years.

EBIT Margin

The EBIT margin experienced significant variation, decreasing sharply from a positive 11.64% in 2020 to a negative margin of -6.94% in 2021. It then recovered to a modest 3.14% in 2022 and improved substantially to 18.22% in 2023, further increasing to 24.22% in 2024. This trend indicates a strong recovery in operational profitability after a challenging year in 2021.

Asset Turnover

Asset turnover ratio showed steady improvement from 0.29 in 2020 to a peak of 0.4 in 2023, demonstrating enhanced efficiency in using assets to generate sales. Nonetheless, it declined back to 0.29 in 2024, signaling potential challenges or changes in asset utilization efficiency during the latest period.

Financial Leverage

Financial leverage decreased notably from 7.13 in 2020 to 4.93 in 2021, indicating reduced reliance on debt financing. Thereafter, it gradually increased to 5.16 in 2022, 5.96 in 2023, and 6.37 in 2024, suggesting a strategic shift towards greater leverage in recent years.

Return on Equity (ROE)

ROE declined from a positive 16.04% in 2020 to a negative -16.17% in 2021, reflecting significant losses or diminished profitability. It marginally improved to 0.62% in 2022 before surging to 34.63% in 2023 and slightly declining to 33.9% in 2024. The recovery and strong performance in 2023 and 2024 indicate enhanced overall profitability and efficient capital use following the previous downturn.

Net Profit Margin

The net profit margin shows significant volatility over the five-year period. It started at 7.81% in 2020, then declined sharply to a negative figure of -9.17% in 2021, indicating a loss during that year. Following this downturn, the margin recovered to a marginal positive value of 0.31% in 2022. Thereafter, it improved substantially, reaching 14.68% in 2023 and further increasing to 18.67% in 2024. This suggests a strong recovery and improving profitability in the most recent years.

Asset Turnover

The asset turnover ratio indicates how effectively the company utilized its assets to generate revenue. It showed a steady increase from 0.29 in 2020 to 0.40 in 2023, signaling improving efficiency in asset use over this period. However, in 2024, the ratio dropped back to 0.29, erasing the prior gains in turnover efficiency and indicating a potential slowdown or change in asset utilization in the latest year.

Return on Assets (ROA)

ROA reflects the company's ability to generate profit from its assets. Initially, ROA rose from 2.25% in 2020 to negative territory at -3.28% in 2021, consistent with the net profit margin decline and reflecting negative returns on assets during that year. Subsequently, it recovered to barely positive 0.12% in 2022, followed by a notable increase to 5.81% in 2023. In 2024, ROA decreased slightly to 5.32%, but remained markedly higher than the earlier years. This pattern demonstrates a strong recovery in asset profitability after the 2021 downturn, with the company achieving solid returns on assets in the most recent years.

Overall Insights

The financial ratios collectively highlight a period of considerable operational difficulties in 2021, characterized by losses and negative returns. The following years indicate an upward trajectory in profitability and asset performance, with net profit margin and ROA showing strong improvement by 2023 and 2024. Despite improvements in asset turnover up to 2023, the decline in 2024 suggests potential challenges or strategic shifts affecting asset utilization. The overall trend points to a recovery phase after a challenging year, yielding stronger profitability and efficiency in recent years.

Tax Burden

The tax burden ratio exhibits fluctuation over the observed period. It starts at 1.09 in 2020, drops significantly to 0.32 in 2022, then rises to stabilize around 0.87-0.89 in 2023 and 2024. This variation suggests inconsistency in tax liabilities relative to earnings during these years.

Interest Burden

The interest burden shows a declining trend from 0.62 in 2020 to 0.3 in 2022, indicating reduced interest expenses or improved earnings before interest and taxes. Subsequently, it increases notably to approximately 0.9 in 2023 and slightly decreases to 0.88 in 2024, suggesting some revival in interest costs or changes in operational profitability impacting interest coverage.

EBIT Margin

The EBIT margin reveals a volatile but overall positive trend. From 11.64% in 2020, it plunges to a negative margin of -6.94% in 2021, indicating operating losses. A recovery begins in 2022 with a modest positive margin of 3.14%, followed by substantial improvement to 18.22% in 2023 and further to 24.22% in 2024. This demonstrates strengthening operational profitability in the latter years.

Asset Turnover

The asset turnover ratio increases gradually from 0.29 in 2020 to 0.4 in 2023, indicating improved efficiency in utilizing assets to generate sales. However, it declines back to 0.29 in 2024, suggesting a reduction in asset utilization efficiency in the most recent year.

Return on Assets (ROA)

Return on assets follows a trajectory mirroring changes in profitability. Starting at 2.25% in 2020, it falls into negative territory at -3.28% in 2021, consistent with operating losses. Recovery is observed with a slight positive return of 0.12% in 2022, followed by significant growth to 5.81% in 2023 and a slight decrease to 5.32% in 2024. Overall, there is a marked improvement in the company's ability to generate profit from its assets after an initial setback.

The financial data reveals several notable trends in the profitability and burden ratios over the five-year period under consideration. The analysis focuses on the tax burden, interest burden, EBIT margin, and net profit margin.

Tax Burden Ratio

The tax burden ratio exhibited variability, starting at a value above 1.0 in 2020, indicating potentially unusual tax effects or adjustments. It decreased significantly to 0.32 in 2022 before recovering to levels close to 0.9 in 2023 and 2024. This suggests fluctuations in tax expenses relative to pre-tax income, with a marked dip in tax impact around 2022.

Interest Burden Ratio

The interest burden ratio showed an initial value of 0.62 in 2020, declining sharply to 0.3 in 2022, which implies higher interest expenses relative to earnings before interest and taxes during that year. Subsequently, the ratio improved substantially, rising to 0.9 in 2023 and slightly decreasing to 0.88 in 2024, reflecting an enhanced capacity to cover interest obligations.

EBIT Margin

The EBIT margin displayed a pronounced fluctuation across the period. Starting at a relatively strong 11.64% in 2020, it turned negative in 2021 (-6.94%), suggesting operational difficulties or extraordinary expenses. Recovery began in 2022 with a modest positive margin of 3.14%, followed by significant improvement in 2023 (18.22%) and further growth in 2024 (24.22%), indicating increasingly efficient core operations and profitability.

Net Profit Margin

The net profit margin mirrored the EBIT margin trend but with amplified volatility. From a positive 7.81% in 2020, the margin dropped to a negative -9.17% in 2021, signaling net losses. There was a marginal recovery to 0.31% in 2022 before a pronounced improvement in 2023 (14.68%) and continued growth in 2024 (18.67%). This progression reflects improved bottom-line results and effective management of costs and expenses beyond operating profit.

Overall, the data indicate that the company experienced a challenging period around 2021 and 2022, with both operational and profitability metrics suffering, as evidenced by negative margins and lower burden ratios. However, the subsequent years demonstrate a robust rebound, characterized by strengthening margins and more favorable tax and interest burden ratios. These patterns suggest a recovery in operational performance and financial health.