Advanced Micro Devices Inc. (NASDAQ:AMD)

The financial ratios presented demonstrate notable shifts in performance metrics over the five-year period. While reported ratios generally indicate a stabilization or modest improvement in recent years, the adjusted ratios reveal a more complex picture, particularly concerning profitability and asset utilization in the earlier part of the period.

Asset Turnover

Reported total asset turnover experienced a significant decline from 1.32 in 2021 to 0.35 in 2022, remaining relatively stable around 0.33-0.38 through 2023 and 2024 before increasing to 0.45 in 2025. The adjusted total asset turnover mirrors this trend, though consistently higher, suggesting that adjustments are recognizing additional revenue or reducing the asset base. The initial drop indicates a substantial decrease in revenue generated per dollar of assets.

Leverage Ratios

Reported debt to equity and debt to capital ratios remained low and relatively stable, fluctuating between 0.03 and 0.05. However, the adjusted ratios show a higher initial leverage in 2021 (0.11 for both ratios), decreasing to levels consistent with the reported figures by 2022, and then gradually increasing to 0.06 in 2025. This suggests the adjustments are recognizing additional debt obligations. Reported financial leverage decreased from 1.66 in 2021 to 1.20-1.23 between 2022 and 2024, with a slight increase to 1.22 in 2025. The adjusted financial leverage follows a similar pattern, remaining slightly higher than the reported value.

Profitability Ratios

Reported net profit margin declined considerably from 19.24% in 2021 to 5.59% in 2022, and further to 3.77% in 2023, before recovering to 6.36% in 2024 and 12.51% in 2025. The adjusted net profit margin exhibits a more dramatic fluctuation, falling to negative values in 2022 (-0.89%) and 2023 (-0.50%) before improving to 2.37% in 2024 and 13.36% in 2025. This indicates that adjustments significantly impact the reported profitability, particularly in the earlier years. The adjusted values suggest underlying profitability issues not fully reflected in the reported figures during 2022 and 2023.

Return on Investment Ratios

Reported return on equity (ROE) and return on assets (ROA) mirrored the decline in net profit margin, decreasing substantially from 42.18% and 25.46% in 2021 to 2.41% and 1.95% respectively in 2022, and further to 1.53% and 1.26% in 2023. Both ratios showed improvement in 2024 and 2025, reaching 6.88% and 5.64% respectively. The adjusted ROE and ROA demonstrate a similar pattern of decline and subsequent recovery, but with negative values in 2022 and 2023, highlighting the impact of adjustments on these key performance indicators. The divergence between reported and adjusted values suggests that adjustments are recognizing factors impacting the efficiency of equity and asset utilization.

In summary, the adjusted ratios reveal a more challenging period for the company in 2022 and 2023 than indicated by the reported figures, particularly concerning profitability and asset utilization. While recent years show improvement in both reported and adjusted metrics, the magnitude of the adjustments warrants further investigation to understand the underlying drivers and their implications for future performance.

The analysis reveals fluctuating performance in asset utilization over the five-year period. Net revenue demonstrates an overall upward trajectory, while total assets experienced a significant increase in 2022 followed by more moderate growth. The adjusted total asset turnover ratio exhibits a similar pattern to the reported ratio, though with slightly different magnitudes.

Net Revenue

Net revenue increased from US$16,434 million in 2021 to US$34,639 million in 2025. A substantial increase occurred between 2021 and 2022, followed by a slight decrease in 2023, and then resumed growth through 2025. This indicates a generally positive revenue trend, with some year-over-year volatility.

Total Assets

Total assets grew considerably from US$12,419 million in 2021 to US$76,926 million in 2025. The most significant increase was observed between 2021 and 2022, with subsequent annual increases being more incremental. This suggests a period of substantial investment followed by a more measured expansion of the asset base.

Reported Total Asset Turnover

The reported total asset turnover ratio decreased from 1.32 in 2021 to 0.35 in 2022, remaining relatively stable at 0.33 in 2023, increasing to 0.37 in 2024, and then rising to 0.45 in 2025. The initial decline in 2022 coincides with the large increase in total assets, suggesting that revenue did not grow at the same rate. The subsequent increases in 2024 and 2025 indicate improving efficiency in asset utilization as revenue growth outpaced asset growth.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio followed a similar trend to the reported ratio, beginning at 1.43 in 2021, decreasing to 0.35 in 2022, remaining at 0.34 in 2023, increasing to 0.38 in 2024, and reaching 0.45 in 2025. The slight differences between the reported and adjusted ratios suggest that the adjustments to total assets have a minor impact on the overall assessment of asset utilization. The ratio’s improvement in the later years mirrors the trend in net revenue, indicating a strengthening relationship between sales and asset investment.

In conclusion, while revenue has generally increased over the period, the asset turnover ratios suggest that the company initially experienced a decrease in efficiency following a significant asset expansion. However, more recent years demonstrate an improving trend in asset utilization, as evidenced by the increasing ratios, indicating a more effective deployment of assets to generate revenue.

The adjusted debt to equity ratio exhibited fluctuations over the five-year period. Initially, the ratio increased significantly before stabilizing and then increasing again. Total debt and stockholders’ equity both demonstrated overall growth, but the adjustments made to these figures impacted the resulting ratio differently across the observed years.

Adjusted Debt to Equity Ratio - Overall Trend

The adjusted debt to equity ratio began at 0.11 in 2021, representing a notably higher level of leverage compared to the reported ratio of 0.04. It decreased to 0.05 in 2022 and remained stable at 0.05 in 2023. A slight decrease to 0.04 was observed in 2024, followed by an increase to 0.06 in 2025. This indicates a generally moderate level of financial leverage, with a recent tendency towards increased debt relative to equity.

Components of the Ratio

Adjusted total debt increased from US$732 million in 2021 to US$4,006 million in 2025. The largest single-year increase occurred between 2024 and 2025. Adjusted stockholders’ equity also increased consistently over the period, rising from US$6,629 million in 2021 to US$63,246 million in 2025. The growth in adjusted stockholders’ equity consistently outpaced the growth in adjusted total debt, except for the final period, contributing to the ratio’s overall trend.

Comparison to Reported Debt to Equity

The reported debt to equity ratio remained relatively stable, ranging from 0.03 to 0.05 over the period. The adjustments to both debt and equity figures resulted in a significantly different ratio profile, particularly in 2021 where the adjusted ratio was more than double the reported ratio. This suggests the adjustments are materially impacting the assessment of the company’s leverage position.

The observed increases in both adjusted debt and equity suggest overall financial expansion. However, the recent increase in the adjusted debt to equity ratio in 2025 warrants monitoring to assess whether this represents a shift in the company’s capital structure or a temporary fluctuation.

The adjusted debt to capital ratio exhibits fluctuations over the five-year period. Initially, the ratio increased significantly before stabilizing and then increasing again. Total debt and total capital both demonstrate an overall upward trend, though with considerable annual variation, particularly in total debt.

Adjusted Debt to Capital Ratio - Trend Analysis

The adjusted debt to capital ratio began at 0.10 in 2021, representing a substantial increase from the reported debt to capital ratio of 0.04. This suggests a significant adjustment to the debt and capital figures. The ratio decreased to 0.05 in both 2022 and 2023, indicating a period of relative stability. A further decrease to 0.04 was observed in 2024, before rising to 0.06 in 2025. This final increase suggests a renewed reliance on debt financing relative to capital.

Total Debt - Trend Analysis

Adjusted total debt increased from US$732 million in 2021 to US$2,956 million in 2022, a substantial rise. It continued to increase to US$3,109 million in 2023, before decreasing to US$2,321 million in 2024. The most recent year, 2025, shows a further increase to US$4,006 million, representing the highest level of adjusted total debt over the observed period.

Total Capital - Trend Analysis

Adjusted total capital demonstrated a consistent upward trend throughout the period. It increased from US$7,361 million in 2021 to US$59,647 million in 2022, a significant expansion. Growth continued, albeit at a slower pace, reaching US$59,922 million in 2023, US$59,827 million in 2024, and US$67,252 million in 2025. The consistent growth in total capital suggests ongoing investment and equity accumulation.

The interplay between the fluctuating adjusted total debt and the consistently growing adjusted total capital results in the observed pattern of the adjusted debt to capital ratio. The initial high ratio in 2021, followed by stabilization and a subsequent increase in 2025, warrants further investigation into the specific drivers of debt and capital changes within the company.

An examination of the financial information reveals trends in adjusted financial leverage alongside associated balance sheet components. Total assets experienced substantial growth between 2021 and 2025, increasing from US$12,419 million to US$76,926 million. Stockholders’ equity also demonstrated a considerable upward trajectory, rising from US$7,497 million in 2021 to US$62,999 million in 2025. The adjusted values for both total assets and stockholders’ equity largely mirrored these trends, indicating consistency in the adjustments applied.

Adjusted Financial Leverage – Overall Trend

Adjusted financial leverage exhibited relative stability over the five-year period. It began at 1.73 in 2021, decreased to 1.19 between 2022 and 2023, and remained at 1.19 in 2024 before increasing slightly to 1.21 in 2025. This suggests a period of deleveraging followed by a modest increase in leverage towards the end of the observed timeframe.

Adjusted Financial Leverage vs. Reported Financial Leverage

Reported financial leverage consistently remained below the adjusted financial leverage throughout the period. The difference between the two metrics narrowed over time. In 2021, adjusted leverage was 1.73 compared to a reported leverage of 1.66. By 2025, the adjusted leverage was 1.21, while the reported leverage was 1.22. This indicates that the adjustments made to the balance sheet items had a greater impact on the leverage ratio in earlier years, with the effect diminishing over time.

Balance Sheet Adjustments

The adjustments to total assets and stockholders’ equity were relatively small in comparison to the overall values. The difference between reported and adjusted total assets remained consistently below US$1,000 million. Similarly, the difference between reported and adjusted stockholders’ equity was also relatively contained. This suggests the adjustments are not materially altering the overall scale of the balance sheet, but are nonetheless impacting the calculated leverage ratio.

In summary, the company experienced significant growth in both assets and equity. Adjusted financial leverage remained relatively stable, with a slight increase in the most recent year. The adjustments applied to the balance sheet consistently increased the calculated leverage ratio, though the magnitude of this effect lessened over the period.

The adjusted net profit margin exhibited considerable fluctuation over the five-year period. Initial values were strong, followed by a period of negative performance, and ultimately a return to growth. A detailed examination of the trends is presented below.

Overall Trend

The adjusted net profit margin began at 21.08% in 2021, decreased significantly to -0.89% in 2022, and continued to decline to -0.50% in 2023. A positive shift occurred in 2024, with the margin reaching 2.37%, and this upward trajectory continued into 2025, culminating in a margin of 13.36%.

Year-over-Year Changes

From 2021 to 2022, the adjusted net profit margin experienced a substantial decrease of 21.97 percentage points. This was followed by a smaller decrease of 0.39 percentage points from 2022 to 2023. The period from 2023 to 2024 saw a significant improvement of 2.87 percentage points, and the largest year-over-year increase occurred between 2024 and 2025, with a rise of 10.99 percentage points.

Relationship to Net Revenue

While net revenue generally increased over the period, the adjusted net profit margin did not consistently follow suit. The decline in the margin from 2021 to 2023 occurred despite increasing net revenue in 2022. The substantial increase in net revenue from 2024 to 2025 coincided with a significant improvement in the adjusted net profit margin, suggesting a stronger correlation in these years.

Comparison to Reported Net Profit Margin

The adjusted net profit margin consistently differed from the reported net profit margin. The adjustments appear to have a dampening effect on profitability in 2021, a more pronounced negative effect in 2022 and 2023, a moderate effect in 2024, and a positive effect in 2025. The magnitude of the difference between the two margins varied across the years, indicating the impact of the adjustments was not constant.

In summary, the adjusted net profit margin demonstrates a volatile pattern, marked by initial strength, a period of losses, and a subsequent recovery. The recent positive trend suggests improving profitability, but the earlier fluctuations warrant further investigation into the nature of the adjustments made to net income.

The adjusted return on equity (ROE) exhibits significant fluctuations over the five-year period. Initial values are substantially higher than subsequent years, followed by a period of negative values before recovering towards the end of the observed timeframe. A detailed examination of the components contributing to this metric reveals key insights into the company’s performance.

Adjusted ROE Trend

The adjusted ROE began at 52.26% in 2021, demonstrating a strong initial performance. This was followed by a sharp decline, resulting in negative values of -0.37% and -0.20% in 2022 and 2023, respectively. A modest recovery to 1.06% occurred in 2024, with a more substantial increase to 7.32% in 2025. This suggests a period of profitability challenges followed by improving financial results.

Net Income Influence

Adjusted net income mirrors the ROE trend. It started at US$3,464 million in 2021, decreased to a loss of US$-209 million in 2022, further declining to a loss of US$-114 million in 2023. A positive value of US$611 million was recorded in 2024, culminating in a significant increase to US$4,628 million in 2025. The negative net income in 2022 and 2023 directly contributed to the negative adjusted ROE during those years.

Stockholders’ Equity Influence

Adjusted stockholders’ equity demonstrates a generally increasing trend throughout the period. Starting at US$6,629 million in 2021, it rose to US$56,691 million in 2022, and continued to increase to US$56,813 million in 2023, US$57,506 million in 2024, and US$63,246 million in 2025. While stockholders’ equity consistently increased, its impact on ROE was offset by the fluctuations in adjusted net income, particularly the negative values in 2022 and 2023. The substantial increase in equity in 2022, despite the net loss, likely reflects other comprehensive income or equity transactions.

Comparison to Reported ROE

The adjusted ROE differs considerably from the reported ROE. The reported ROE also declined from 42.18% in 2021 to 2.41% in 2022 and 1.53% in 2023, before recovering to 2.85% in 2024 and 6.88% in 2025. The adjustments made to net income and stockholders’ equity significantly alter the ROE calculation, indicating that the reported ROE may not fully reflect the underlying economic performance. The larger divergence in 2022 and 2023 suggests the adjustments are particularly impactful during periods of lower profitability.

In conclusion, the adjusted ROE reveals a volatile period followed by improvement. The negative ROE values in 2022 and 2023 were primarily driven by negative adjusted net income, despite a consistent increase in adjusted stockholders’ equity. The substantial recovery in 2025, driven by a significant increase in adjusted net income, suggests a positive shift in the company’s financial performance.

The adjusted return on assets (ROA) exhibited considerable fluctuation over the five-year period. Initial values were strong, followed by a period of negative returns, and a subsequent recovery towards levels comparable to the initial period. A detailed examination of the components and trends is presented below.

Adjusted ROA Trend

In 2021, the adjusted ROA stood at 30.15%. This was followed by a significant decline, resulting in negative adjusted ROA values of -0.31% and -0.17% in 2022 and 2023, respectively. A modest recovery was observed in 2024, with the adjusted ROA reaching 0.89%. The most recent year, 2025, showed a further improvement, with the adjusted ROA increasing to 6.05%.

Relationship to Adjusted Net Income

The negative adjusted ROA values in 2022 and 2023 directly correlate with negative adjusted net income during those years. Specifically, adjusted net income was -$209 million in 2022 and -$114 million in 2023. Conversely, positive adjusted net income in 2021, 2024, and 2025 (reaching $4,628 million in 2025) coincided with positive adjusted ROA values.

Relationship to Adjusted Total Assets

Adjusted total assets remained relatively stable between 2021 and 2023, fluctuating around $67.5 billion. A slight increase was noted in 2024, reaching $68.538 billion, and a more substantial increase occurred in 2025, with adjusted total assets reaching $76.542 billion. The increase in assets in 2025, coupled with increased adjusted net income, contributed to the higher adjusted ROA observed in that year.

Comparison to Reported ROA

The adjusted ROA consistently differed from the reported ROA. The largest discrepancies were observed in 2022 and 2023, where the reported ROA was 1.95% and 1.26% respectively, while the adjusted ROA was negative. This suggests that adjustments made to net income and/or total assets had a material impact on the profitability assessment. The difference between adjusted and reported ROA narrowed in 2024 and 2025, but remained notable.

Overall, the adjusted ROA demonstrates a volatile pattern, heavily influenced by fluctuations in adjusted net income. The recent trend indicates a return to profitability, as evidenced by the increasing adjusted ROA in 2024 and 2025, alongside growth in adjusted total assets.