Pfizer Inc. (NYSE:PFE)

The analysis of the financial ratios over the five-year period reveals several noteworthy trends. The Return on Assets (ROA) demonstrated considerable fluctuation, beginning at 6.23% and rising substantially to 15.91% by the end of 2022. However, a sharp decline followed, with ROA decreasing drastically to 0.94% in 2023 before slightly recovering to 3.76% in 2024. This pattern suggests operational profitability experienced significant volatility, with a peak in 2022 and a notable downturn thereafter.

Financial Leverage exhibited a generally decreasing trend from 2.44 in 2020 to 2.06 in 2022, indicating a reduction in the use of debt relative to equity during this period. In 2023, however, this ratio increased again to 2.54 and slightly decreased to 2.42 in 2024, implying increased reliance on financial leverage after 2022 but stabilizing somewhat in the most recent year.

Return on Equity (ROE) followed a pattern similar to ROA, starting at 15.21% in 2020 and rising sharply to a peak of 32.79% in 2022. Subsequently, it declined significantly to 2.38% in 2023, with a modest recovery to 9.11% in 2024. This volatility in ROE reflects corresponding changes in profitability and the effect of leverage.

Return on Assets (ROA)

Increased strongly for the first three years, peaking in 2022, followed by a pronounced drop and partial recovery.

Financial Leverage

Generally decreased from 2020 to 2022, then increased and stabilized slightly below the initial levels by 2024.

Return on Equity (ROE)

Rose significantly until 2022, then decreased sharply, with a small rebound in the last reported year.

Overall, the data indicates a period of improving profitability and decreasing leverage up to 2022, after which a marked decline in returns and a rise in leverage took place. The subsequent partial recovery suggests efforts to stabilize financial performance, though profitability ratios remain well below their 2022 peaks. The fluctuations highlight potential challenges during 2023 with some improvement in 2024.

The financial data exhibits notable fluctuations across the analyzed periods, revealing varying operational efficiencies and profitability metrics.

Net Profit Margin

The net profit margin shows an increasing trend from 22.53% in 2020 to a peak of 31.01% in 2022, indicating improving profitability during this period. However, there is a sharp decline to 3.56% in 2023, followed by a partial recovery to 12.62% in 2024. This significant drop suggests challenges in maintaining profit levels in 2023 before improvements were seen in the subsequent year.

Asset Turnover

The asset turnover ratio improved from 0.28 in 2020 to 0.51 in 2022, reflecting increased efficiency in using assets to generate sales. In 2023, the ratio dropped to 0.26, paralleling the decline in profitability, before rising slightly to 0.30 in 2024. This pattern indicates operational challenges affecting asset utilization during 2023 with some recovery afterwards.

Financial Leverage

Financial leverage demonstrates relative stability with minor fluctuations, starting at 2.44 in 2020, decreasing steadily to 2.06 in 2022, and then rising to 2.54 in 2023 before slightly decreasing again to 2.42 in 2024. The increase in leverage in 2023, concurrent with declines in profitability and asset turnover, may signal increased reliance on debt or obligations during that challenging period.

Return on Equity (ROE)

ROE mirrors the trend seen in net profit margin, rising markedly from 15.21% in 2020 to 32.79% in 2022, indicating strong shareholder returns. The measure then falls sharply to 2.38% in 2023, suggesting significantly reduced profitability and/or efficiency, before experiencing some recovery to 9.11% in 2024. This fluctuation is consistent with the observed operational and financial challenges in the same timeframe.

Overall, the data reveals a period of growth and improved profitability through 2022, followed by a pronounced downturn in 2023 across profitability, efficiency, and return metrics. The partial recovery in 2024 suggests efforts to stabilize operations and financial performance, although levels remain below earlier peaks.

Tax Burden

The tax burden ratio fluctuated over the period, starting at 0.95 in 2020, gradually declining to 0.9 by 2022. However, a sharp increase was observed in 2023, peaking at 2.11, before returning to 1.00 in 2024. This indicates an unusual spike in tax impact in 2023 followed by normalization in the subsequent year.

Interest Burden

The interest burden exhibited an upward trend from 0.87 in 2020 to 0.97 in 2022, suggesting improved operating income relative to interest expenses. In 2023, there was a steep decline to 0.31, indicating a significant increase in interest expense burden or lower operating income, with partial recovery to 0.72 in 2024.

EBIT Margin

EBIT margin experienced growth from 27.04% in 2020 to a peak of 35.52% in 2022, reflecting enhanced profitability from operations. A substantial drop occurred in 2023 to 5.4%, which corresponds with the notable changes seen in tax and interest burdens. The margin partially recovered to 17.44% in 2024 but remained considerably below earlier peak levels.

Asset Turnover

The asset turnover ratio increased steadily from 0.28 in 2020 to 0.51 in 2022, indicating more efficient use of assets to generate sales. This efficiency declined sharply to 0.26 in 2023 before a slight improvement to 0.3 in 2024, suggesting operational challenges or asset base changes affecting sales generation capacity.

Financial Leverage

Financial leverage decreased from 2.44 in 2020 to 2.06 in 2022, reflecting a reduction in the use of debt relative to equity. It increased again to 2.54 in 2023, potentially indicating higher borrowing or a decrease in equity. In 2024, it decreased marginally to 2.42, remaining above pre-2023 levels.

Return on Equity (ROE)

ROE showed an upward trajectory from 15.21% in 2020 to a high of 32.79% in 2022, demonstrating improved overall profitability and effective use of equity. A steep decline followed in 2023, falling to 2.38%, with a partial rebound to 9.11% in 2024. This pattern reflects the combined effects of profitability, asset efficiency, and leverage changes, with 2023 marking a year of financial strain.

Net Profit Margin

The net profit margin increased significantly from 22.53% in 2020 to a peak of 31.01% in 2022, indicating enhanced profitability during this period. However, there was a sharp decline to 3.56% in 2023, followed by a partial recovery to 12.62% in 2024. This volatility suggests that profitability faced considerable challenges after 2022 but showed signs of improvement in the subsequent year.

Asset Turnover

Asset turnover improved steadily from 0.28 in 2020 to 0.51 in 2022, reflecting increasing efficiency in using assets to generate sales. Nonetheless, asset turnover dropped sharply to 0.26 in 2023, indicating a decrease in asset utilization efficiency, before slightly recovering to 0.30 in 2024. The dip in 2023 aligns with the decline observed in profitability metrics, suggesting operational pressures.

Return on Assets (ROA)

ROA rose considerably from 6.23% in 2020 to 15.91% in 2022, paralleling the trends in net profit margin and asset turnover, demonstrating strong overall returns on asset investments during this period. The measure fell dramatically to 0.94% in 2023, indicating a steep loss of asset profitability, then increased modestly to 3.76% in 2024. The decline and subsequent recovery pattern in ROA corresponds closely with movements in profitability and asset efficiency, highlighting a period of financial strain followed by tentative improvement.

The analysis of the financial ratios over the five-year period reveals significant fluctuations in the company's profitability and operational efficiency metrics.

Tax Burden

The tax burden ratio shows a generally declining trend from 0.95 in 2020 to 0.9 in 2022, indicating a slight decrease in the effective tax rate relative to pre-tax earnings during this period. However, there is a sharp increase to 2.11 in 2023, which is an unusual spike suggesting an extraordinary tax expense or accounting adjustment for that year, followed by a return to 1.0 in 2024, indicating normalization.

Interest Burden

The interest burden ratio improves from 0.87 in 2020 to 0.97 in 2022, reflecting reduced interest expenses relative to earnings before interest and taxes (EBIT). In 2023, this ratio deteriorates sharply to 0.31, implying a significant rise in interest costs or financial leverage, before partially recovering to 0.72 in 2024.

EBIT Margin

EBIT margin demonstrates a positive growth trend from 27.04% in 2020 to a peak of 35.52% in 2022, indicating improved operating profitability. This is followed by a pronounced decline to 5.4% in 2023, signaling a substantial drop in operational efficiency or increased operating costs, and a partial recovery to 17.44% in 2024.

Asset Turnover

Asset turnover ratio increases markedly from 0.28 in 2020 to 0.51 in 2022, suggesting enhanced utilization of assets to generate sales. Nevertheless, this is followed by a reduction to 0.26 in 2023, and a slight improvement to 0.3 in 2024, which may point to a contraction in sales efficiency or changes in asset base utilization during these years.

Return on Assets (ROA)

ROA trends align with the movements of EBIT margin and asset turnover, rising from 6.23% in 2020 to a peak of 15.91% in 2022, demonstrating strong asset profitability. The sharp drop to 0.94% in 2023 indicates a significant decline in overall asset-generated returns, consistent with the aforementioned dips in operational and interest burdens. Some recovery occurs in 2024, raising ROA to 3.76%, although still below the earlier years.

Tax Burden

The tax burden ratio shows a general decline from 0.95 in 2020 to 0.9 in 2022, indicating a slight improvement in profitability retention after taxes. However, there is a significant anomaly in 2023, where the ratio spikes to 2.11, suggesting either an accounting irregularity or a substantial tax expense or credit reversal. The ratio then normalizes back to 1.00 in 2024.

Interest Burden

The interest burden ratio increases steadily from 0.87 in 2020 to 0.97 in 2022, reflecting a reduction in interest expenses relative to earnings before interest and taxes. In 2023, there is a sharp decline to 0.31, implying a considerable increase in interest expenses or a decrease in EBIT. This partial recovery to 0.72 in 2024 does not fully return to earlier levels, indicating continued pressure from interest costs or lower EBIT.

EBIT Margin

The EBIT margin improves consistently from 27.04% in 2020 to a peak of 35.52% in 2022, demonstrating growing operational efficiency and profitability. Nonetheless, it deteriorates sharply to a low of 5.4% in 2023, before partially recovering to 17.44% in 2024. This pattern suggests a significant operational or market disruption in 2023 that severely impacted earnings before interest and taxes.

Net Profit Margin

The net profit margin follows a similar trajectory to the EBIT margin, increasing from 22.53% in 2020 to 31.01% in 2022, highlighting strong bottom-line growth. It then falls drastically to 3.56% in 2023, reflecting the combined effects of increased tax and interest burdens along with operational challenges. In 2024, the margin improves to 12.62%, indicating partial recovery but remaining well below the pre-2023 levels.