Thermo Fisher Scientific Inc. (NYSE:TMO)

An examination of long-term activity ratios reveals varying trends in asset utilization over the five-year period. Generally, the ratios suggest a slight decrease in efficiency in converting assets into revenue towards the end of the period, although fluctuations are present.

Net Fixed Asset Turnover

The net fixed asset turnover ratio exhibited a modest increase from 4.71 in 2021 to 4.84 in 2022. This was followed by a decline to 4.54 in 2023, a slight recovery to 4.61 in 2024, and a further decrease to 4.22 in 2025. This indicates a weakening ability to generate sales from fixed assets over time, despite short-term improvements.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

Similar to the standard net fixed asset turnover, this ratio also showed an initial increase from 3.98 in 2021 to 4.13 in 2022. A subsequent downward trend was observed, with values decreasing to 3.89 in 2023, 3.97 in 2024, and 3.71 in 2025. The inclusion of operating lease obligations appears to amplify the declining trend in asset utilization.

Total Asset Turnover

The total asset turnover ratio increased from 0.41 in 2021 to 0.46 in 2022, representing improved efficiency in utilizing all assets to generate sales. However, this was followed by a slight decrease to 0.43 in 2023 and 0.44 in 2024, before declining to 0.40 in 2025. This suggests a diminishing capacity to generate revenue per dollar of total assets.

Equity Turnover

The equity turnover ratio peaked at 1.02 in 2022, indicating strong sales generation relative to shareholder equity. A consistent decline was then observed, with values decreasing to 0.92 in 2023, 0.86 in 2024, and 0.83 in 2025. This suggests a decreasing ability to generate sales for each dollar of equity invested.

Overall, the observed trends suggest a gradual decline in asset utilization efficiency across multiple metrics towards the end of the analyzed period. While initial years showed some improvement, the latter years demonstrate a consistent weakening in the ability to generate revenue from both fixed assets, total assets, and equity.

The net fixed asset turnover ratio exhibits a generally stable, though slightly declining, pattern over the five-year period. Revenues demonstrate an overall increase, while net property, plant, and equipment also increased, influencing the observed ratio behavior.

Overall Trend

The net fixed asset turnover ratio began at 4.71 in 2021 and decreased to 4.22 in 2025. While fluctuations occurred during the period, a subtle downward trend is apparent.

Year-over-Year Changes

From 2021 to 2022, the ratio increased from 4.71 to 4.84, indicating improved efficiency in generating revenue from fixed assets. A subsequent decrease to 4.54 was observed between 2022 and 2023. The ratio experienced a slight recovery to 4.61 in 2024 before declining again to 4.22 in 2025.

Revenue and Asset Relationship

Revenues increased from US$39,211 million in 2021 to US$44,556 million in 2025. Net property, plant, and equipment also increased, moving from US$8,333 million in 2021 to US$10,565 million in 2025. The ratio’s decline suggests that revenue growth did not keep pace with the growth in fixed assets, particularly in the later years of the period.

Recent Performance

The most recent year, 2025, shows the lowest net fixed asset turnover ratio at 4.22. This suggests a reduced efficiency in utilizing fixed assets to generate sales compared to earlier years in the observed period. The increase in net property, plant, and equipment in 2025, coupled with a relatively smaller increase in revenue, contributed to this decline.

Continued monitoring of this ratio is recommended to assess whether the downward trend persists and to understand the underlying drivers of the change in asset utilization.

The net fixed asset turnover ratio, calculated using property, plant, and equipment net of accumulated depreciation and including operating lease right-of-use assets, demonstrates a relatively stable performance over the five-year period, with a slight downward trend observed towards the end of the period.

Revenues

Revenues increased from US$39,211 million in 2021 to US$44,915 million in 2022, representing a significant growth rate. However, revenues experienced a slight decrease in 2023 to US$42,857 million before stabilizing at US$42,879 million in 2024. A further increase to US$44,556 million is noted in 2025.

Property, Plant & Equipment (Including Operating Lease, Right-of-Use Asset)

Property, plant, and equipment net increased consistently from US$9,864 million in 2021 to US$11,004 million in 2023. A minor decrease to US$10,795 million occurred in 2024, followed by a more substantial increase to US$12,012 million in 2025.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

The net fixed asset turnover ratio began at 3.98 in 2021 and rose to 4.13 in 2022, indicating improved efficiency in generating revenue from fixed assets. The ratio then decreased to 3.89 in 2023, before a slight recovery to 3.97 in 2024. A more noticeable decline to 3.71 is observed in 2025. This suggests a decreasing ability to generate sales revenue for each dollar invested in fixed assets towards the end of the analyzed period, potentially due to the faster growth in fixed assets compared to revenue growth in 2025.

The fluctuations in the net fixed asset turnover ratio appear to be influenced by the interplay between revenue changes and the investment in property, plant, and equipment. While revenue generally increased over the period, the growth in fixed assets, particularly in 2025, contributed to the observed decline in the ratio.

The total asset turnover ratio exhibited fluctuations over the five-year period. Initially, the ratio increased before stabilizing and then experiencing a slight decline.

Total Asset Turnover Trend

The total asset turnover ratio began at 0.41 in 2021, increasing to 0.46 in 2022. This represents an improvement in the company’s efficiency in utilizing its assets to generate revenue. The ratio then decreased slightly to 0.43 in 2023 and remained relatively stable at 0.44 in 2024. A further decrease to 0.40 was observed in 2025.

Revenues demonstrated an overall upward trend, increasing from US$39,211 million in 2021 to US$44,556 million in 2025, although a slight dip occurred between 2021 and 2023. Total assets also generally increased, rising from US$95,123 million in 2021 to US$110,343 million in 2025. The combined effect of these trends influenced the total asset turnover ratio.

Relationship to Revenue and Asset Growth

The initial increase in the total asset turnover ratio in 2022 coincided with a more substantial increase in revenues compared to the growth in total assets. However, as asset growth continued at a faster pace than revenue growth in 2024 and 2025, the ratio experienced a corresponding decline. This suggests that while the company is growing its asset base, it is not translating into a proportional increase in revenue generation during those periods.

The 2025 ratio of 0.40 represents a return to a level similar to that observed in 2021, despite the significant increase in revenue over the entire period. This indicates that a larger asset base is now required to generate a similar level of revenue as in 2021.

Potential Considerations

The fluctuations in the total asset turnover ratio warrant further investigation. Potential factors contributing to these changes could include shifts in asset composition, changes in sales strategies, or industry-specific dynamics. A deeper analysis of the underlying components of both revenues and total assets is recommended to understand the drivers behind these trends.

The equity turnover ratio for the analyzed period demonstrates a generally decreasing trend. Revenues exhibited initial growth followed by a slight decline and subsequent recovery, while shareholders’ equity consistently increased throughout the period. These movements influence the observed equity turnover pattern.

Equity Turnover Trend

The equity turnover ratio began at 0.96 in 2021, increased to 1.02 in 2022, and then decreased steadily over the subsequent three years, reaching 0.83 in 2025. This indicates a diminishing ability to generate revenue from each dollar of shareholder equity.

Revenue Impact

Revenues increased from US$39,211 million in 2021 to US$44,915 million in 2022, contributing to the initial rise in equity turnover. A slight decrease to US$42,857 million in 2023 coincided with the beginning of the decline in the ratio. Revenues stabilized in 2024 and then increased to US$44,556 million in 2025, but not at a rate sufficient to reverse the downward trend in equity turnover.

Shareholders’ Equity Impact

Total shareholders’ equity increased consistently throughout the period, from US$40,793 million in 2021 to US$53,407 million in 2025. This continuous growth in the equity base, coupled with relatively stable or slightly declining revenues after 2022, is the primary driver of the decreasing equity turnover ratio.

The consistent increase in shareholders’ equity, while generally positive, appears to be outpacing revenue growth, resulting in a less efficient utilization of equity to generate sales. Further investigation into the reasons for the equity increases and the revenue fluctuations would be beneficial.