Oracle Corp. (NYSE:ORCL)

Return on Assets (ROA)

The Return on Assets exhibited an initial increase from 8.78% in 2020 to 10.48% in 2021, indicating improved efficiency in asset utilization. However, this was followed by a notable decline to 6.15% in 2022, with only a slight recovery observed in subsequent years reaching 7.42% in 2024 and slightly decreasing to 7.39% in 2025. This pattern suggests some volatility in asset profitability after the peak in 2021, with moderate improvement but not returning to earlier peak levels.

Financial Leverage

Financial Leverage showed significant fluctuations over the period. Starting at 9.56 in 2020, it surged dramatically to 25.03 in 2021, then experienced a very sharp increase to 125.24 in 2023, indicating a substantial rise in the use of debt relative to equity during that year. Following this peak, leverage decreased considerably to 16.20 in 2024 and further to 8.23 in 2025, returning closer to 2020 levels. The absence of data for 2022 prevents a complete trend analysis for that year, but the overall pattern suggests a period of increased financial risk followed by deleveraging.

Return on Equity (ROE)

Return on Equity mirrored the high volatility seen in Financial Leverage. It started at 83.94% in 2020 and soared to an exceptionally high 262.43% in 2021, with no data available for 2022. ROE then peaked at an extraordinary 792.45% in 2023, coinciding with the peak in financial leverage, suggesting that increased leverage greatly amplified equity returns. Subsequently, ROE declined sharply to 120.26% in 2024 and further to 60.84% in 2025, still remaining above the 2020 level. These trends indicate that equity returns were heavily influenced by leverage changes and point to periods of heightened financial risk and reward.

Net Profit Margin

The net profit margin exhibits notable fluctuations over the analyzed period. Starting at 25.94% in 2020, it increased significantly to 33.96% in 2021. However, it then declined sharply to 15.83% in 2022 before showing a modest recovery to 17.02% in 2023. The upward trend continues with margins reaching 19.76% in 2024 and 21.68% in 2025. Overall, despite the volatility, net profit margin demonstrates a recovery trend after the dip in 2022.

Asset Turnover

Asset turnover presents a relatively stable pattern with minor fluctuations. It started at 0.34 in 2020, dipping slightly to 0.31 in 2021. It rebounded to 0.39 in 2022, followed by a small decline to 0.37 in 2023 and a slight increase to 0.38 in 2024. The ratio decreases again to 0.34 in 2025, aligning with the level observed in 2020. This indicates a generally consistent efficiency in asset utilization over the years.

Financial Leverage

Financial leverage exhibits extreme variability and incomplete data points. The ratio starts at 9.56 in 2020 and rises substantially to 25.03 in 2021. Data for 2022 is missing, but a significant spike is observed in 2023 with financial leverage reaching 125.24, followed by a sharp decrease to 16.2 in 2024, and a further decline to 8.23 in 2025. The extreme peak in 2023 suggests an unusual reliance on debt or liabilities during that year, which normalized considerably afterward.

Return on Equity (ROE)

Return on equity demonstrates extreme volatility and data gaps. Beginning at 83.94% in 2020, it surges dramatically to 262.43% in 2021. The value for 2022 is missing, but ROE escalates further to a very high 792.45% in 2023. Afterwards, it sharply decreases to 120.26% in 2024 and continues to decline to 60.84% in 2025. This pattern reflects extraordinary profitability peaks, especially in 2023, possibly influenced by the financial leverage fluctuations. The subsequent declines also indicate a reversion towards more sustainable returns.

The financial ratios reveal several notable trends over the reviewed periods. The Tax Burden ratio shows some fluctuations, starting at 0.84 and peaking slightly above 1.00 in 2021, before stabilizing around 0.88 to 0.93 in subsequent years, indicating relatively consistent tax efficiency with minor variations.

The Interest Burden ratio generally declines from 0.86 in 2020 to a low of 0.72 in 2023, suggesting increased interest expense relative to earnings; however, a moderate recovery is observed in later years, rising to 0.80 by 2025.

The EBIT Margin experiences a significant decrease from 38.28% in 2021 to around 24.51% in 2022, followed by a gradual recovery to 30.9% in 2025. This pattern indicates compression in operating profitability during the middle years with partial improvement thereafter.

Asset Turnover remains relatively stable throughout the years, fluctuating between 0.31 and 0.39, without a clear upward or downward trend. This stability suggests consistent efficiency in utilizing assets to generate revenue.

Financial Leverage exhibits extreme volatility, with a sharp increase reaching a peak of 125.24 in 2023 followed by a sharp decline to 8.23 in 2025. This volatility signals significant changes in the company’s capital structure over these periods, indicating potential shifts in debt levels or equity changes.

Return on Equity (ROE) follows an extraordinary upward trajectory between 2020 and 2023, rising from 83.94% to a very high 792.45%, before sharply declining to 60.84% in 2025. This erratic behavior closely parallels the fluctuations observed in Financial Leverage, implying that ROE was heavily influenced by leverage during these years. The recent decline suggests a stabilization towards more moderate returns.

Summary of Key Insights

Tax Burden remains relatively stable with minor fluctuations.

Interest Burden declines initially but improves in the later years.

EBIT Margin declines significantly and then shows gradual recovery.

Asset Turnover remains consistent, indicating steady asset efficiency.

Financial Leverage experiences extreme volatility, affecting capital structure risk.

ROE mirrors financial leverage trends, indicating leverage-driven profitability changes with recent moderation.

The analysis of the financial ratios over the six-year period reveals several noteworthy trends and patterns.

Net Profit Margin

The Net Profit Margin exhibits significant variability during the period. It peaked in 2021 at 33.96%, followed by a sharp decline to 15.83% in 2022. Subsequently, it shows a gradual recovery, increasing to 21.68% by 2025. This trend suggests volatility in profitability, with a strong rebound in recent years indicating improved cost management or revenue quality.

Asset Turnover

The Asset Turnover ratio demonstrates moderate fluctuations. It started at 0.34 in 2020, dipped slightly in 2021 to 0.31, then rose to 0.39 in 2022. After a mild decline and stabilization at 0.34 in 2025, the ratio suggests a relatively stable efficiency in utilizing assets to generate revenue, with some short-term improvements in 2022 and 2023 followed by a slight decrease.

Return on Assets (ROA)

The ROA follows a pattern consistent with the Net Profit Margin but with less pronounced swings. It increased from 8.78% in 2020 to a peak of 10.48% in 2021, dropped significantly to 6.15% in 2022, then gradually improved to stabilize around 7.39% by 2025. This indicates a temporary decline in asset profitability in 2022, with a recovery but not reaching the previous peak levels.

Overall, the data suggest that profitability, as measured by Net Profit Margin and ROA, experienced considerable volatility with a notable dip in 2022, followed by partial recovery. The Asset Turnover ratio's relative stability indicates that changes in profitability were more influenced by factors other than asset utilization efficiency, possibly operational or market conditions impacting margins.

Tax Burden

The tax burden ratio exhibits fluctuations over the observed periods, initially increasing from 0.84 in 2020 to a peak of 1.06 in 2021, followed by a downward trend reaching 0.88 by 2025. This indicates variability in effective tax expenses relative to earnings before tax, with a notable spike in 2021 that subsequently normalizes.

Interest Burden

The interest burden ratio demonstrates a decreasing trend from 0.86 in 2020 to its lowest point of 0.72 in 2023, indicating reduced interest expenses relative to earnings before interest and taxes during this period. A slight recovery is observed thereafter, climbing to 0.8 by 2025, though it remains below the 2020 level.

EBIT Margin

The EBIT margin presents a significant decline from 35.98% in 2020 to a low of 24.51% in 2022. This margin then steadily improves over the following years, reaching 30.9% by 2025. The pattern suggests an initial reduction in operational profitability, followed by a gradual recovery toward previous levels.

Asset Turnover

Asset turnover experiences moderate variability during the period, dropping from 0.34 in 2020 to 0.31 in 2021, then rising to 0.39 in 2022. It fluctuates slightly around 0.37-0.38 in the subsequent years before declining to 0.34 by 2025. Overall, the ratio remains relatively stable, reflecting consistent efficiency in generating sales from assets.

Return on Assets (ROA)

ROA follows a pattern similar to EBIT margin, declining from 8.78% in 2020 to a low of 6.15% in 2022. A gradual improvement is observed from 2023 onwards, reaching 7.39% by 2025. This trend indicates a reduction in net profitability relative to assets during the early years, with partial recovery in later periods.

Tax Burden

The tax burden ratio exhibits fluctuations over the observed periods. In 2021, the ratio peaks at 1.06, indicating a higher effective tax impact compared to the initial value of 0.84 in 2020. Following this peak, the ratio declines and stabilizes around 0.88 to 0.93, suggesting a relatively consistent tax liability impact in the later years.

Interest Burden

The interest burden ratio shows a general decreasing trend from 0.86 in 2020 to a low of 0.72 in 2023, implying an improvement in managing interest expenses relative to earnings before interest and taxes. Subsequently, there is a modest increase to 0.8 by 2025, indicating a slight rise in interest costs or debt levels affecting operational earnings.

EBIT Margin

The EBIT margin demonstrates significant variability with a strong start at 35.98% in 2020 and reaching the highest point of 38.28% in 2021. A marked decline occurs in 2022, falling to 24.51%, with a gradual recovery thereafter, reaching 30.9% by 2025. This pattern suggests episodic operational challenges or investments impacting earnings, followed by a slow improvement in operational profitability.

Net Profit Margin

The net profit margin mirrors the EBIT margin's trend but with more pronounced fluctuations. Beginning at 25.94% in 2020, it peaks at 33.96% in 2021 before dropping sharply to 15.83% in 2022. A steady recovery is observed subsequently, with the margin reaching 21.68% by 2025. This indicates that net profitability was significantly affected in 2022, possibly due to increased costs or external factors, but has been improving steadily in the following years.