Union Pacific Corp. (NYSE:UNP)

The financial metrics presented demonstrate varying trends between 2021 and 2025. While reported and adjusted values largely align, discrepancies exist, particularly in leverage and profitability ratios, suggesting potential impacts from specific accounting adjustments. Overall, the period shows a stabilization in asset utilization and liquidity, alongside a reduction in debt-related metrics and a fluctuating, but ultimately improving, profitability profile.

Asset Turnover

Reported and adjusted total asset turnover remained relatively stable, fluctuating between 0.34 and 0.38 over the five-year period. A slight downward trend is observed from 2023 to 2025, decreasing from 0.36 to 0.35. This indicates a consistent, but potentially modestly declining, efficiency in generating sales from its asset base.

Liquidity

The reported and adjusted current ratios exhibited an increasing trend from 2021 to 2023, rising from 0.62 to 0.81. A slight decrease occurred in 2024 to 0.77, followed by a further increase to 0.91 in 2025. This suggests improving short-term liquidity, with the company demonstrating an increased ability to cover its current liabilities with current assets.

Leverage

Reported debt to equity initially increased from 2.10 in 2021 to 2.74 in 2022, before declining steadily to 1.72 in 2025. However, the adjusted debt to equity ratio reveals a significantly lower and more stable profile, decreasing from 1.17 to 1.03 over the same period. This substantial difference suggests the adjustments significantly reduce the reported debt burden. A similar pattern is observed in debt to capital, with adjusted values consistently lower than reported values and exhibiting a decreasing trend. Reported financial leverage followed a similar pattern to debt to equity, decreasing from 4.49 to 3.77, while adjusted financial leverage showed a more moderate decline from 2.37 to 2.19.

Profitability

Reported net profit margin fluctuated between 26.45% and 29.92% throughout the period, with a slight increase observed in the final year. The adjusted net profit margin, however, consistently exceeded the reported margin, starting at 33.70% in 2021 and ending at 30.64% in 2025. This indicates that the adjustments positively impact the reported profitability. Reported ROE decreased from 46.06% to 38.65%, while adjusted ROE showed a more pronounced decline from 27.37% to 23.55%. Reported ROA remained relatively stable, fluctuating around 10%, while adjusted ROA showed a slight increase from 11.57% to 10.77% in 2025.

In conclusion, the adjustments applied to these financial ratios consistently demonstrate a more conservative financial position, particularly concerning leverage and profitability. The trends suggest a company stabilizing its asset utilization and liquidity while managing its debt levels and maintaining a strong, though fluctuating, profitability profile.

The analysis reveals a generally stable, yet subtly shifting, performance regarding asset utilization over the five-year period. Operating revenues experienced an initial increase followed by a slight decline and subsequent stabilization. Total assets consistently increased throughout the period, though at a gradually slowing rate. The reported and adjusted total asset turnover ratios exhibit similar patterns, suggesting the adjustments to total assets do not materially impact the turnover calculation.

Operating Revenues

Operating revenues increased from US$21,804 million in 2021 to US$24,875 million in 2022, representing a significant growth period. However, revenues decreased slightly to US$24,119 million in 2023 before stabilizing at US$24,250 million in 2024 and increasing modestly to US$24,510 million in 2025. This suggests a potential plateauing of revenue growth.

Total Assets

Total assets demonstrated a consistent upward trend, increasing from US$63,525 million in 2021 to US$69,702 million in 2025. The rate of increase slowed over time; the largest increase occurred between 2021 and 2022 (US$1,924 million), while the increase between 2024 and 2025 was the smallest (US$1,983 million). This indicates a diminishing return on asset expansion.

Reported and Adjusted Total Asset Turnover

The reported total asset turnover ratio peaked at 0.38 in 2022, coinciding with the highest operating revenue figure. It then decreased to 0.36 in both 2023 and 2024, and further to 0.35 in 2025. The adjusted total asset turnover ratio mirrored this trend exactly, remaining identical to the reported ratio in each year. This consistency between the reported and adjusted ratios suggests that the adjustments made to total assets are not significantly altering the overall assessment of asset efficiency. The gradual decline in the ratio from 2022 onwards indicates a decreasing ability to generate revenue from each dollar of assets, potentially due to the slower revenue growth relative to the continued asset expansion.

In summary, while the company continues to grow its asset base, the efficiency with which those assets generate revenue appears to be declining. Further investigation into the drivers of this trend may be warranted.

The reported and adjusted current ratios exhibit a similar pattern over the five-year period. Initially, the ratios demonstrate improvement, followed by a slight decline, and then a final increase. The adjusted current ratio begins at 0.62 in 2021, rises to 0.72 in 2022, peaks at 0.81 in 2023, decreases to 0.77 in 2024, and concludes at 0.91 in 2025. The adjusted current assets show a generally increasing trend, mirroring the ratio’s overall movement. Current liabilities, conversely, generally decrease before a slight increase in 2024, then decrease again in 2025.

Current Ratio Trend

The current ratio shows an initial improvement from 2021 to 2023, indicating a strengthening short-term liquidity position. The dip in 2024 suggests a temporary weakening, potentially due to increased current liabilities or a slower growth in current assets. The subsequent rise in 2025 indicates a recovery in short-term liquidity.

Adjusted Current Assets

Adjusted current assets generally increased throughout the period, from US$3,561 million in 2021 to US$4,559 million in 2025. This growth contributes to the overall improvement in the current ratio, particularly in the later years. The increase is not linear, with a slight decrease observed between 2023 and 2024.

Current Liabilities Trend

Current liabilities decreased from US$5,744 million in 2021 to US$5,014 million in 2025, with a minor increase to US$5,254 million in 2024. This decreasing trend, alongside the growth in current assets, positively impacts the current ratio. The 2024 increase in liabilities partially offset the positive effect of asset growth.

The consistency between the reported and adjusted current ratios suggests that the adjustments made to current assets do not materially alter the overall assessment of the company’s short-term liquidity. The final value of 0.91 in 2025 represents the strongest liquidity position within the observed period.

The adjusted debt to equity ratio demonstrates a consistent downward trend over the five-year period. While total debt and common shareholders’ equity fluctuate, the adjusted figures reveal a decreasing reliance on debt relative to equity financing. This suggests a strengthening financial position from the perspective of leverage.

Adjusted Debt to Equity Ratio - Overall Trend

The adjusted debt to equity ratio decreased from 1.17 in 2021 to 1.03 in 2025. This indicates a reduction in financial risk associated with debt financing. The rate of decline appears to be slowing, with smaller decreases observed in later years.

Adjusted Debt to Equity Ratio - Year-over-Year Changes

From 2021 to 2022, the ratio increased from 1.17 to 1.39, representing the only year-over-year increase in the observed period. Subsequent years show consistent declines: 1.22 in 2023, 1.08 in 2024, and finally 1.03 in 2025. The largest single-year decrease occurred between 2022 and 2023.

Components of the Adjusted Ratio

Adjusted total debt increased from US$31,488 million in 2021 to US$32,822 million in 2025, with a peak of US$34,957 million in 2022. Adjusted common shareholders’ equity experienced a more substantial increase, rising from US$26,846 million in 2021 to US$31,892 million in 2025. The greater growth in equity, relative to debt, is the primary driver of the declining ratio.

The consistent decrease in the adjusted debt to equity ratio suggests improved financial flexibility and a reduced burden from debt obligations. The initial increase in 2022 warrants further investigation to understand the factors contributing to the temporary rise in leverage, but the subsequent trend indicates a successful strategy of strengthening the equity base relative to debt.

The reported debt to capital ratio exhibited a fluctuating pattern over the five-year period. Initially, the ratio increased from 0.68 in 2021 to 0.73 in 2022, before decreasing to 0.69 in 2023, and continuing to decline to 0.65 in 2024 and 0.63 in 2025. Total debt generally increased between 2021 and 2022, then decreased slightly in subsequent years, while total capital consistently increased throughout the period.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio demonstrates a consistent downward trend. Starting at 0.54 in 2021, the ratio rose to 0.58 in 2022, then decreased to 0.55 in 2023, 0.52 in 2024, and further to 0.51 in 2025. This indicates a decreasing reliance on debt relative to adjusted capital over the observed timeframe.

Adjusted total debt increased from US$31,488 million in 2021 to US$34,957 million in 2022, then decreased to US$34,179 million in 2023, US$32,463 million in 2024, and US$32,822 million in 2025. Adjusted total capital showed a steady increase throughout the period, moving from US$58,334 million in 2021 to US$64,714 million in 2025. The consistent growth in adjusted capital, coupled with the fluctuations and eventual decrease in adjusted total debt, contributes to the observed downward trend in the adjusted debt to capital ratio.

Debt and Capital Components

The difference between reported and adjusted figures suggests a reclassification of certain financial items impacting both debt and capital calculations. The adjustments consistently result in lower debt and higher capital figures compared to the reported values. This indicates that the adjustments likely involve the reclassification of some liabilities as equity or the inclusion of additional capital components not reflected in the initially reported totals.

The consistent decline in the adjusted debt to capital ratio suggests improving financial leverage. This could be due to increased equity financing, debt reduction, or a combination of both. The trend warrants further investigation to understand the specific drivers behind the adjustments and their impact on the overall financial health of the entity.

An examination of the financial information reveals trends in both reported and adjusted financial leverage over a five-year period. Total assets demonstrate a consistent upward trajectory, increasing from US$63,525 million in 2021 to US$69,698 million in 2025. Common shareholders’ equity experienced fluctuations, declining from 2021 to 2022 before exhibiting growth through 2025, reaching US$18,467 million.

Reported Financial Leverage

Reported financial leverage decreased from 4.49 in 2021 to 3.77 in 2025. The largest decrease occurred between 2022 and 2023, falling from 5.38 to 4.54. A more moderate decline was observed in subsequent years, indicating a lessening reliance on financial leverage as measured by the reported figures.

Adjusted Total Assets & Equity

Adjusted total assets mirrored the trend of total assets, increasing steadily from US$63,535 million to US$69,702 million over the period. Adjusted common shareholders’ equity also increased consistently, moving from US$26,846 million in 2021 to US$31,892 million in 2025. The magnitude of the increase in adjusted equity was greater than the increase in reported equity.

Adjusted Financial Leverage

Adjusted financial leverage exhibited a downward trend, decreasing from 2.37 in 2021 to 2.19 in 2025. The decline was most pronounced between 2021 and 2022, moving from 2.37 to 2.60, before resuming a downward trend. The rate of decrease slowed in the later years of the period. This suggests that adjustments to the asset and equity base result in a more conservative leverage profile than indicated by the reported figures.

The divergence between reported and adjusted financial leverage highlights the impact of specific adjustments made to the balance sheet. The consistent increase in adjusted equity, relative to reported equity, contributes to the lower adjusted leverage ratio. Overall, both reported and adjusted leverage metrics indicate a decreasing reliance on financial leverage over the five-year period.

The adjusted net profit margin exhibited fluctuations over the five-year period. While generally higher than the reported net profit margin, the adjusted metric also demonstrated periods of decline and recovery. A review of the figures reveals a complex pattern requiring further investigation into the nature of the adjustments made to net income.

Adjusted Net Profit Margin - Overall Trend

The adjusted net profit margin began at 33.70% in 2021, decreased to 30.52% in 2022, and then experienced a more substantial decline to 26.80% in 2023. A modest recovery was observed in 2024, with the margin reaching 27.48%, followed by a further increase to 30.64% in 2025. This suggests potential cyclicality or the impact of specific, non-recurring items affecting profitability.

Comparison to Reported Net Profit Margin

Throughout the period, the adjusted net profit margin consistently exceeded the reported net profit margin. The difference between the two metrics varied annually, indicating that the adjustments applied to net income had a material impact on the overall profitability picture. The largest difference occurred in 2021, while the smallest difference was observed in 2025.

Year-over-Year Changes

The largest year-over-year decrease in the adjusted net profit margin occurred between 2022 and 2023, falling by 3.72 percentage points. The most significant increase was observed between 2024 and 2025, with a gain of 3.16 percentage points. These substantial shifts warrant further scrutiny to identify the underlying drivers.

Relationship to Operating Revenues

Operating revenues demonstrated an overall increasing trend, rising from US$21,804 million in 2021 to US$24,510 million in 2025. However, the adjusted net profit margin did not consistently increase alongside revenue growth, suggesting that cost management or other factors influenced profitability independently of sales volume. The dip in margin in 2023 occurred despite a slight increase in operating revenues.

In conclusion, the adjusted net profit margin presents a nuanced picture of the company’s profitability. While generally positive, the observed fluctuations necessitate a deeper understanding of the adjustments being made and their correlation with broader economic conditions and internal operational changes.

The period between 2021 and 2025 demonstrates fluctuating performance in reported and adjusted financial metrics. Net income generally increased over the period, though with a dip in 2023, before resuming an upward trajectory. Common shareholders’ equity exhibited more consistent growth throughout the five-year span.

Reported Return on Equity (ROE)

Reported ROE peaked in 2022 at 57.54% before declining steadily through 2025, reaching 38.65%. This decrease occurred despite increases in net income in later years, indicating that the growth in equity outpaced the growth in earnings. The initial high value in 2022 was followed by a consistent downward trend.

Adjusted Return on Equity (ROE)

Adjusted ROE showed a different pattern. It began at 27.37% in 2021 and increased to 30.12% in 2022. However, it then experienced a more pronounced decline, falling to 23.15% in 2023 and 22.18% in 2024. A slight recovery was observed in 2025, with adjusted ROE rising to 23.55%. The adjusted ROE remained relatively stable between 23% and 30% throughout the period, but exhibited greater volatility than the trend in shareholders’ equity.

Relationship between Reported and Adjusted ROE

A significant difference exists between reported and adjusted ROE values each year. The adjusted ROE is consistently lower than the reported ROE. This suggests that the adjustments made to net income and shareholders’ equity have a substantial impact on the overall profitability assessment. The gap between the two metrics remained relatively consistent throughout the period, indicating that the nature of the adjustments did not change significantly.

Equity Trends

Common shareholders’ equity decreased in 2022, but then experienced consistent growth from 2023 through 2025. Adjusted common shareholders’ equity followed a similar pattern, with a slight decrease in 2022, followed by steady increases. The adjusted equity values are substantially higher than the reported equity values, indicating significant adjustments are being made to the equity calculation.

In summary, while net income demonstrated overall growth, the return on equity metrics, both reported and adjusted, experienced fluctuations. The adjusted ROE provides a different perspective on profitability compared to the reported ROE, highlighting the importance of understanding the nature of the adjustments made to arrive at these figures.

The adjusted return on assets (ROA) exhibited a generally stable pattern over the five-year period, with some fluctuations. Initial values were strong, followed by a dip in the middle of the period, and a subsequent recovery. A comparison between reported and adjusted ROA suggests the impact of certain adjustments on the overall profitability assessment.

Adjusted ROA Trend

The adjusted ROA began at 11.57% in 2021 and remained relatively consistent at 11.60% in 2022. A decrease was then observed in 2023, falling to 9.63%. This downward movement continued slightly into 2024, reaching 9.84%. However, a notable increase occurred in 2025, with the adjusted ROA rising to 10.77%.

Comparison with Reported ROA

Throughout the period, the adjusted ROA consistently exceeded the reported ROA. The difference between the two metrics varied, but generally ranged between 0.88% and 1.27%. This indicates that the adjustments made to net income and total assets positively impacted the calculated return on assets.

Adjusted Net Income and Assets

Adjusted net income showed an initial increase from US$7,349 million in 2021 to US$7,592 million in 2022, followed by a decline to US$6,463 million in 2023. It then increased to US$6,663 million in 2024 and reached US$7,509 million in 2025. Adjusted total assets demonstrated a steady upward trend, increasing from US$63,535 million in 2021 to US$69,702 million in 2025.

The increase in adjusted ROA in 2025 appears to be driven by a combination of increased adjusted net income and continued growth in adjusted total assets. The dip in 2023, despite asset growth, suggests a significant impact from the adjustments made to net income during that year.